How to buy a property in the UAE

The United Arab Emirates has established itself as a profitable destination for real estate investments. In this article, we will look at how foreigners can purchase real estate in the United Arab Emirates, as well as highlight key aspects such as buying real estate in Dubai, the pros and cons of living there and much more.

The pros and cons of living in the UAE

The Arab Emirates have a unique flavor that affects life in the UAE, the pros and cons of which are important to understand when buying real estate.

Advantages:

Security: The UAE annually ranks among the top five places in the world in terms of security.

Tax policy: there are no income taxes for individuals in the UAE. Legal entities with an annual turnover of less than 375 thousand dirhams ($102 thousand) are also exempt from paying tax.

Infrastructure: The country offers a world-class modern infrastructure that includes high-quality roads, healthcare, education and entertainment.

The international community: The UAE is a multicultural country with a large number of expats from different parts of the world. This creates a unique cultural atmosphere with a variety of cultural activities, cuisines and traditions.

Disadvantages:

The high cost of living: the costs of housing rent, education, health care and daily needs exceed the average in most countries of the world.

Climate: A hot climate can be a disadvantage for those who do not tolerate high temperatures. In summer, the thermometer can reach 50 degrees Celsius.

Cultural differences: The main cultural norms in the UAE are rooted in Islamic traditions, which requires foreigners to observe local customs.

Features of buying real estate in the Emirates

In the UAE, foreigners can purchase real estate in designated areas known as “freehold zones”. They are approved by the governments of various emirates and include such popular areas as Dubai Marina, Palm Jumeirah and Downtown Dubai in Dubai.

Who can buy real estate in the UAE

Buying property in the UAE for Russians or other foreigners may have restrictions depending on the emirate. The main centers, such as Dubai and Abu Dhabi, have the most zones with freehold real estate rights. But the average price of an apartment in Dubai is also relatively high.

Types of real estate ownership

Freehold is the right of full ownership of real estate for an unlimited period. The owner of a freehold property has the right to sell, lease or transfer real estate by inheritance, as well as make changes to the basic layout.

A leasehold is the right to own real estate for a certain period of time, usually from 30 to 99 years. After the expiration of the lease period, the ownership right may be extended or returned to the landowner. At the same time, issues such as redevelopment, pet maintenance and others require written permission from the owner of the freehold property.

Joint ownership is the right of several persons to jointly own an object of property.

Dubai Real Estate Market Overview

The residential real estate market in Dubai, the most famous emirate within the UAE, is a fast-growing and constantly developing market. The evidence is the growing number of transactions over the past three years.

So, in 2023, more than 128 thousand residential real estate transactions were made in Dubai, which is almost 4 times more than in 2020.

• – data is presented as of 05/06/2024 – date of analysis

As of May 6, 2024, about 52 thousand residential real estate transactions have already been completed in Dubai, which is an excellent start for this year.

Apartments predominate in the structure of residential real estate transactions — their share as of the beginning of May 2024 was 89%; accordingly, the share of villas is 11%.

• – data is presented as of 05/06/2024 – date of analysis

The structure by type of transactions is as follows: 83% are purchase and sale transactions using own funds, 14% are transactions involving borrowed funds, 3% are real estate donation transactions.

• – data is presented as of 05/06/2024 – date of analysis

It is worth noting that leveraged transactions are more often made when buying villas – about a third of villas from all transactions with this type of residential real estate. In turn, the share of borrowed funds in transactions with apartments is about 13%.

The structure of housing readiness transactions as of May 6, 2024:

– in transactions with apartments at the date of analysis, the share of transactions with existing real estate (Existing Properties) was 43%, with Off-Plan real estate – 57%;

– in transactions with villas, the share of transactions with existing real estate (Existing Properties) was 60%, with Off-Plan real estate – 40%.

The cost of real estate in the United Arab Emirates

As of the date of the analysis (May 6, 2024), the following apartment prices have been established in Dubai:

The average price for ready-made apartments (Existing Properties) was 3,800 Usd/sq.m, which is 10% more than in 2023. Apartment prices in Dubai have been rising since 2020 (the change by 2020 was about +62% per square meter), and now we see that this trend continues in 2024.

The average price for apartments under construction/projected (Off-Plan Properties) was set at 5344 USD/sq.m, which is 4% more than in 2023.

In the villa segment, the price situation is as follows:

The average price per square meter in an already built villa at the date of analysis is 3135 Usd/sq.m, which is 10% more than in 2023. In the villa segment, as well as in the apartment segment, prices have been rising since 2020.

The average price per square meter in an off-plan villa at the date of analysis was set at 3931 Usd/sq.m, which is 11% more than in 2023.

It should be borne in mind that the growing price tags for Dubai real estate please investors, but potential buyers may be forced to think about whether they should look for more affordable options in other regions of the United Arab Emirates.

Prospects and risks of investing in Dubai real estate: interview with an expert

Below is a summary table with brief information about the cost of housing in other emirates of the UAE, as well as a chart with the price range for apartments in the emirates. It is worth noting here that the United Arab Emirates is a federal state consisting of several absolute monarchies, and the Emirates of Dubai and Abu Dhabi are the most open in terms of information and data on the real estate market.

An expert on real estate investments in Dubai: Golden visa for 10 years, taxes and ROI

How to buy a property in the UAE for a foreigner

Buying a property in the UAE by a foreigner is a process that requires knowledge of local legislation and market specifics. Foreign citizens can purchase real estate in specially designated areas, which gives them full ownership rights. The main stages include the selection of an object, checking the legal purity of the transaction and signing a purchase and sale agreement.

Citizens of which countries have the right to purchase real estate in the UAE

Foreigners from any country can purchase real estate in the UAE. The purchase rules may vary slightly between different emirates, but in general the system is open to everyone without civil restrictions.

Foreigners can buy apartments, villas, townhouses, and land plots in freehold zones. The most popular objects are apartments and villas in resort complexes and high—class residential areas.

Citizens and companies of the Cooperation Council for the Arab States of the Persian Gulf (GCC) have privileges. In their rights to purchase real estate, they are equated with residents of the UAE and, as, for example, in Dubai, they do not have territorial restrictions. In other emirates, such as Sharjah, they may need special permission from the local government.

Property taxes in the UAE

Taxes in the UAE for foreigners are quite mild — a striking example of this is the absence of income tax for individuals. And although there is no annual real estate tax in the country, a number of fees are expected for buyers when purchasing and owning properties.

VAT

Since 2018, the UAE has introduced value added tax (VAT) at a rate of 5%.

Transfer of ownership tax

There is no real estate tax in Dubai, but there is a one-time tax on the transfer of ownership, which is 4% (2% in Abu Dhabi) of the value of the property. As a rule, the buyer and the seller pay it in half.

Additional fees

If, for example, the tax on an apartment in Dubai consists only in paying VAT and transferring ownership, then everything is somewhat different with fees. Here are their main types:

Administrative Fee: apartments and offices — 580 ($158) dirhams, land — 430 ($117) dirhams, Off-plan real estate — 40 ($10) dirhams.

Registration fee: the value of the property is less than 500 thousand dirhams — 2 thousand dirhams ($550). If more, then 4 thousand dirhams ($1,090).

The fee for the certificate of ownership is 250 dirhams ($68).

Agency/realtor services. The UAE law provides for transactions with the mandatory mediation of realtors. The contribution amount is 2% of the value of the property.

Mortgages and installments in the Emirates

Mortgages in the UAE are available for both residents and non-residents. The requirements for the latter are much higher. They will receive a mortgage loan without significant problems if they can cover 50% or more of the value of the purchased property. In this case, a mortgage in Dubai is provided on the terms:

The minimum monthly salary set by the bank (from $4,000 and above) for the employed. The annual turnover is from 3 million dirhams ($816 thousand) for the self-employed.

Compliance with the minimum age (25-30 years) at the time of application and the maximum (65 years) at the time of repayment of the loan.

The possibility of buying real estate located in all emirates for the employed. And only in Abu Dhabi and Dubai for the self-employed.

If the specified figure is less, banks may request:

Tax returns for 2 years.

The report of the credit bureau of the country of origin.

Personal bank account statements for the last 12 months.

Mortgages in Dubai for foreigners who are able to cover less than 20% of the cost of real estate are much more complicated. After the turmoil of the global financial crisis, only a small number of banks are willing to take on such risks.

When applying for a mortgage, a commission is charged for the organization of a mortgage in the amount of 1% of its amount and a commission for the valuation of real estate in the amount of 2500-3500 dirhams ($680–$950).

Installments from the developer

The real estate market in Dubai from the developer, as well as throughout the UAE, offers flexible installment terms. The payment is divided into two parts: the first is paid during the construction of the facility, the second — at the time of its delivery. A prerequisite is an initial payment of 10% to 20% of the cost of the object.

Real estate insurance in the United Arab Emirates

Real estate insurance in the UAE is an important aspect of property ownership and management, providing protection against various risks such as fire, flood, theft, etc.

The main types of real estate insurance:

Building Insurance. Covers damage from fire, explosion, natural disasters and other emergencies.

Contents Insurance. Covers damage or loss of furniture, electronics, clothing and other personal items due to theft, fire or natural disasters.

Additional insurance options:

Liability Insurance to third parties (Liability Insurance). Damage to neighbor’s property, injury to third parties on your property.

Income loss Insurance (Loss of Rent Insurance). Compensation for lost income in case the property becomes unsuitable for living or renting due to insured events.

Maintenance of real estate in the UAE

The maintenance of real estate in the UAE includes a number of expenses and obligations that must be considered when acquiring and owning property. One of the disadvantages of real estate in Dubai is the higher cost of maintenance compared to other emirates.

Maintenance costs:

Service fees. The size is determined by the management company — the cost can vary from 3 to 30 dirhams per square meter;

Utility bills. The average for two people is about 440-550 dirhams ($120–$150). Television and Internet will cost another 300 ($81) dirhams per month.

Taxes and fees. Landlords are required to pay a municipal tax, which is often included in the rent and amounts to about 5% of the rental price.

Insurance. The amount of the insurance premium varies from 0.1% to 0.5% of the value of the insured property per year.

How to get a resident visa in the UAE

The UAE offers several ways to obtain a resident visa, including visas for real estate investors, entrepreneurs, high-level professionals and retirees. A residence permit in the UAE is especially popular when buying real estate.

Conditions for obtaining a resident visa through the purchase of real estate:

The property must have a minimum value of 1 million dirhams ($272 thousand). It is important that the amount must be fully paid, and the property must be ready to move in.

To apply for a visa, you must provide documents confirming ownership of real estate, proof of financial stability and no criminal record.

The visa is usually issued for 2 or 3 years with the possibility of extension while maintaining ownership. For investors who have invested more than 5 million dirhams, the UAE golden visa is available for a period of 5 years.

The procedure for obtaining a visa:

Applying for a resident visa at the UAE Immigration Service. This can be done through accredited agents or directly through the UAE Government portal.

Obtaining a health certificate after passing a mandatory medical examination.

After the application is approved, you must obtain a migration card.

Getting a label in the passport.

A resident visa to the UAE when buying real estate can be extended as long as the ownership of the property remains.

How to get UAE citizenship

The government is in no hurry to give UAE citizenship to foreigners, and real estate in this case is also not a good reason.

The three main ways to become a citizen of the Emirates:

Naturalization: it is legal to live and work in the UAE for at least 30 years.

Origin: if the parents are UAE citizens, then the child receives the same citizenship regardless of the place of birth.

Marriage (for women only): to marry a UAE citizen.

There are two additional ways, but with their own specifics:

For investments: investors with impressive capital and a certain period of residence in the country can apply for citizenship. Each application is considered individually, and the necessary thresholds for accommodation and investment capital are not disclosed.

For outstanding achievements: applied to doctors, scientists, inventors and artists. The main requirement is a significant and generally recognized contribution in their field (research, scientific work, the introduction of innovative approaches, international awards). Doctors and scientists must additionally live and work in the UAE for at least 10 years.

The process of purchasing real estate in the UAE

The step-by-step process of how to buy an apartment in Dubai or another emirate is unified in the UAE. In the case of a remote purchase, the documents can be signed and sent through a notary or a special agency that deals with the registration of real estate from a distance.

Choosing a property and checking documents. Inspect the property and make sure it meets your requirements. Check the legality of the object and the availability of all necessary documents from the seller.

Advance booking. Enter into a Reservation Agreement with the seller or developer. Make a deposit of 10% to 20% as proof of intent.

Conclusion of a preliminary agreement. A preliminary agreement is signed between the buyer and the seller, which specifies the terms of sale, price and payment schedule.

Application for a NOC certificate. The NOC Certificate (No Objection Certificate, NOC Dubai) is issued find a property in UAE by the developer or management company. It confirms the absence of claims between the parties.

Signing of a purchase agreement (Sales and Purchase Agreement, SPA). The parties sign the main sales agreement (contract F). It includes a description of the property, the price and the terms of the transfer of ownership. The term of such an agreement usually lasts until full payment and transfer of ownership.

Transfer of ownership rights.Registration of the transfer of ownership rights takes place at the office of the land Department of the emirate. After paying for the remaining part of the property, the buyer is issued a certificate of ownership — in Dubai, this is Title Deed Dubai. If it is a question of purchasing a new building, the Land Department (DLD) issues an oqood dubai certificate. It is converted to a Title Deed after all installment payments are made.

Payment of government fees. When registering a transaction with the land department, a fee is charged, usually amounting to about 4% of the value of the property.

Completion of the transaction.

After checking the availability of all necessary documents, including the certificate of ownership and all payment documents, coordinate with the seller the date of transfer of the property and receive the keys to the object. From now on, you can apply for a resident visa based on your property in the UAE.

Required documents:

Passports of both sides

Stay visa (if applicable)

Preliminary agreement

Purchase and sale agreement

The NOC certificate.

Features of the real estate rental market in the UAE

The UAE rental real estate market has its own characteristics and nuances that should be considered before buying a property.

The rights and obligations of the lessor:

The owner of the property is obliged to keep the housing in good condition, corresponding to the described conditions at the time of conclusion of the contract.

Maintenance and repair obligations must be clearly stipulated in the contract.

Receiving rental income is subject to municipal tax, which is usually 5% of the annual rental price and is charged to the tenant, but transferred by the landlord.

The rights and obligations of the tenant:

The tenant has the right to live in the property without unwanted interference from the landlord.

The tenant and the landlord agree on the number of deferred checks and the timing of their provision. The rent is usually paid in two, four or six checks per year.

Compliance with the terms of use of the property according to the agreement, including restrictions on occupancy, redevelopment and other changes without the consent of the landlord.

Regulation of rental relations:

There are special courts in the UAE that resolve issues related to rent.

Rent indexation is regulated by the municipality, which sets the maximum possible percentage of rent increase depending on the market situation.

If we talk specifically about real estate in Dubai, the pitfalls there are most often manifested in the possible requirements of the landlord to pay rent for a year in advance with one check.

Where is the best place to buy real estate in the UAE

To determine where it is best to live, in Dubai or another emirate of the UAE, below is a brief summary of them.

Dubai

The specifics of buying real estate in Dubai include the availability of housing for foreigners in specially designated areas. Is it profitable to buy real estate in Dubai? Yes, it is considered a profitable investment, but the cost per square meter in Dubai remains high compared to many other emirates.

Popular areas of Dubai for buying investment property

Abu Dhabi

The city is no less developed than Dubai, while real estate prices are, on average, more attractive.

Sharjah

Sharjah offers more affordable real estate prices compared to Dubai and Abu Dhabi. The city is known for its cultural events and institutions.

Ras Al Khaimah

A unique combination of beaches and mountains for those who are looking for tranquility. The Ras Al Khaimah Government offers various incentives to attract investors, including tax incentives.

Ajman

Ajman offers the lowest real estate prices in the region, which, coupled with its proximity to Dubai, makes this Emirate attractive to those who work in Dubai, but prefer a more relaxed and less expensive lifestyle.

Frequently Asked questions about buying real estate in the UAE

Is it possible to get a residence permit in the UAE for the purchase of real estate?

Yes, a resident visa to the UAE is available for the purchase of real estate worth at least 1 million dirhams ($272 thousand). A visa to the UAE is usually issued for 2 or 3 years with the possibility of extension.

How to buy a property in Dubai?

Buying a property in Dubai includes the following steps: choosing a property and checking its legality; signing a preliminary agreement and making a deposit; obtaining a NOC certificate from the developer; paying the remaining amount and registering the transaction with the land department; obtaining a certificate of ownership.

Is it possible to buy an apartment in Dubai without citizenship?

Yes, foreigners can buy apartments in Dubai without having UAE citizenship. Foreign buyers can own real estate in designated freehold zones with full ownership rights.

What is the UAE Golden Visa?

The Golden visa or golden visa of the UAE is a long—term resident visa of the UAE, which is issued to foreign investors, entrepreneurs, specialists in the field of science and art, as well as students. UAE residence permit for the purchase of real estate is received by investors who have invested more than 2 million dirhams ($ 544 thousand) in real estate. It is granted for 5 or 10 years and is subject to renewal.