Over the last few years thousands of tourists have come to Dubai on holiday and have been impressed with the high standards of living and the relaxed, crime-free lifestyle they have found here. As a result, many tourists have taken advantage of an excellent exchange rate coupled with new property laws allowing foreigners to invest in a holiday home in the sun.
There are several amazing real estate developments and opportunities are readily available for anyone who wants to purchase property in Dubai, whether it is purely for investment purposes, a holiday home in the sun or indeed, to reside in or sell on in due course. Prices have increased considerably since 2002 when property first became available to foreign investors, however the market is still highly competitive compared with similar properties available in European destinations, and prices are expected to continue rising, at least over the next few years.
In fact, prices compare favourably to Europe with typical prices of property per square foot about 1/5 th the price of properties in London .
Another favourable factor to consider is that the dirham is linked to the US dollar and the exchange rate currently relating to Sterling and the Euro is particularly beneficial to British and European investors.
In 2002, as a result of a government decision, foreign investors, whether a resident or a visitor, were allowed for the first time to purchase freehold or 99 year leasehold properties in certain areas of Dubai. In July 2006, the government confirmed that all properties built by Emaar, Nakheel and Dubai Properties would be deemed freehold and Emaar commenced registering properties with the Land Registration Department on 19 th September 2006.
There are three ways to purchase property in Dubai ; the most common way is to purchase an apartment or villa directly through the developer, in which case the property will probably be purchased 'off-plan'. It is worth noting that several developers, Emaar and Nakheel for example, offer buyers a Residence Visa if you purchase on certain developments. A Residence Visa is renewable every three years but is necessary if you wish to take up permanent residence in Dubai .
Each developer has their own payment terms and normally this consists of a 10% deposit, followed by 'stage payments' at intervals during the construction of the property and as contracted with the developer when paying the deposit. The final payment is normally paid on satisfactory completion and handover of the property.
It is not necessary for a buyer to have a bank account in Dubai as it is relatively easy to transfer funds into the country. There are no government taxes when buying property in Dubai and there is no capital gains tax when selling the property making the market particularly attractive.
Maintenance charges for apartments are payable to the developer on an annual basis and are normally charged per square foot of the property.
The developer should be able to provide the buyer with an indication of what these charges are likely to be prior to the property being completed. These charges can be expensive and are made to cover on-going operating costs such as the maintenance to lifts and common areas, landscaping and watering of gardens, rubbish collection and security cover.
Mortgages are available to prospective purchasers and developers will normally recommend a certain bank or financial institution with which they conduct business. Interest rates are linked to the UK mortgage market, but are becoming more competitive and it may pay to shop around.
Currently local mortgage rates vary between 6% and 7.5%. When considering how much you will be allowed to borrow, financial institutions will normally lend 65% of the purchase prive to non-residents and up to 90% to residents.
Property can also be purchased from any one of numerous real estate agencies, or through the secondary market directly from the owner, in which case a 'premium' is normally charged.
The 'premium' is the profit made from the initial purchase price, for example an apartment bought originally for Dhs 1 million and currently on sale for Dhs 2 million has attracted a 100% 'premium'. Some banks and financial institutions are reluctant to lend money against the 'premium' or increased in value since the property was first purchased, so again it pays to shop around to get the best deal.
Any prospective buyer should be aware that there are some unscrupulous 'sellers' who are out to make as much money as possible and unfortunately 'gazumping' is a frequent occurrence in Dubai. Before conducting business with any individual selling property it may be beneficial to seek legal advice, certainly before handing over any deposit.
You should also be aware that when purchasing property on the secondary market, the developer may well charge a 'transfer charge' normally between 2% and 5% of the original purchase price to offset their costs of changing the legal contract. |
