10 Essential Things To Know Before Buying Property In Dubai
As you probably know, Dubai has one of the biggest real estate markets in the world. Offering enormous benefits, exceptional value as well as myriads of amazing features, Dubai’s real estate market excels in satisfying the needs of home buyers in comparison to other markets in the world.
Are you also interested in buying property in Dubai? Are you wondering what are things to know before buying property in Dubai?
Read on to the end to find out about 10 essential things you must know before buying property in Dubai…
Tip #1 To Buy Property In Dubai– Location
There’s a famous saying that there are three factors that define the price of a property. Those 3 things are location, location and location. When it comes to choosing the right location, there are a number of things you should consider. The most suitable neighborhood for you completely depends on your requirements.
For example, families prefer a property near to school for their children. On the other hand, single people or young professionals prefer a location close to downtown.
So, there’s a necessary question that you should ask yourself; “What is your purpose of owning a property in Dubai”? Once you have a clear answer to this question, trust me, choosing the neighborhood will become much easier.
New Locations in Dubai
If you’re looking for a cheap property in Dubai, then Dubai South would be a perfect choice for you. This is because Dubai South offers affordable properties that will grow in value in future. The population of Dubai is ever increasing and there is going to be huge demand for properties in many new areas of Dubai in the next five to ten years.
Developed Locations in Dubai
If your purpose of owning a property in Dubai is to have a great source of income, then I would suggest you to invest in developed areas in Dubai. Some of these incredible communities include: Jumeirah Lake Towers (JLT), Dubai Marina, Palm Jumeirah, Jumeirah Beach Residence (JBR) etc.
Affordable Locations In Dubai
If you want to go for more affordable areas, there are a large number of options that you can consider. You could opt for Discovery Gardens, Dubai International City, Jumeirah Village Circle, Dubai Sports City, Jumeirah Village Triangle, and Media Production City etc.
In short, choosing the best area to buy property in Dubai is closely linked to the outcome that you want to achieve.
Tip #2 To Buy Property In Dubai– Master Developer
Let’s assume that you have chosen your preferred neighborhood/community in Dubai. What is the next step?
To understand full details of a community/neighborhood you have to look at the track record of its master developer.
Commonly Known Master Developers in Dubai
Although there are a large number of master developers in Dubai and the UAE, the most reputable ones include Emaar Properties (Downtown Dubai, Dubai Marina, Dubai Creek & Harbor etc), Nakheel (Jumeirah Village Circle, Palm Jumeirah, Jumeirah Village Triangle etc), and Damac Properties (Damac Hills, Akoya Oxygen (Damac hills 2) and etc).
Master developer is one of the most important factors determining the value of your property in Dubai. In the case that the community is well maintained and the developer is highly trusted and famous, it will ultimately bring more interest of people.
As a landlord, you will have more tenants interested in renting your property and as a seller, you will have more buyers willing to buy your apartment or villa in Dubai.
So, before you go ahead and make a decision, I would highly recommend to take some time and do a research about these master developers in Dubai.
Tip #3 To Buy Property In Dubai– Project Developer
Unlike many countries around the globe, the development in Dubai is developed by only one real estate developer. There are special communities in which you can buy a piece of land and build your own villa based on your preference and desire.
A developer is a company who builds a project including a residential/ commercial building or cluster of villas/ townhouses for sale in Dubai.
Once you have made your decision about the location and verified which developer is best, it is time to make your choice about the project. While the real estate company is responsible for construction and maintenance of the community, it is the project developer who is responsible for construction and maintenance of the building.
Once the building is completed, the maintenance company is chosen by developer for the first year and afterwards by Owners Association. However, if the project’s quality is not good, it means that the maintenance company is not effective.
When you choose a trusted experienced real estate agency, your realtor can give you detailed information about each developer and its reputation in the market. So, you can decide which developer to choose and which to avoid.
Tip #4 To Buy Property In Dubai– Maintenance Company
In some cases, however not happening many times, someone buys a property in a good neighborhood, from a good company, but the architectural marvel is not well maintained. It is of course the maintenance company’s fault. This ultimately ruins the reputation of the building.
If the maintenance company is not doing its job well, the owners association has the right to terminate its contract and hire a new company.
In most of the meetings among Owners Associations, majority of owners are not available. This is due to the fact that there are a huge number of overseas investors in Dubai.
So, before you go ahead and make the decision to buy that particular apartment for sale in Dubai, you must verify the reputation of the maintenance/ management company. Your realtor can be the best source of information in this case, surely.
On the other hand, if you are buying a ready to move project in Dubai, you can simply visit the building and see how well it is maintained. This is the best way to make your decision about that property in Dubai.
Tip #5 To Buy Property In Dubai– Age Of The Building
Dubai is a new city and most of its buildings are either new or under construction. To be more precise, the oldest buildings in Dubai are not more than 15 years old. As Dubai is growing very fast, there’s always some new development being born.
Due to the huge interest of local and international investors in properties for sale in Dubai, off-plan properties in Dubai have always been in demand. People usually buy these kinds of properties because they are more affordable, and also come with easy and flexible payment plans.
However, again you should decide based on your requirements. If you prefer a ready to move property in Dubai, you shouldn’t look at off-plan properties. Let’s assume that you need a ready to move property in Dubai. In this case, knowing the age of the building is important.
In Dubai, the developer is responsible for any malfunctioning in your property for up to one year from the date the property is completed. The damages in structure of the building are also responsibility of the company for a maximum period of 10 years from the date of completion.
So, if you are buying new properties for sale in Dubai, you’re most likely to be covered under this warranty. On the contrary to this, if the building is more than 10 years old, you will be responsible to do any kind of repairing work as the owner.
As I stated earlier, Dubai is a newly born city in the world and many rules have changed or improved in the last few years. The newer projects are developed and passed based on latest safety rules and standards. Thus, it is a better idea to invest in newer properties in Dubai.
However, it doesn’t mean that an older property is not worth investing in. Most of the buildings in Dubai have high standards of construction and maintenance. So, any project you choose, will not be a bad choice at all!
Tip #6 To Buy Property in Dubai– Property Condition
In many countries across the world, the person who sells the property has to provide an inspection report to the person who is buying that property. This inspection/ snag report makes it easier for you to become aware of the actual condition of the property. In Dubai, you can ask your realtor to arrange a visit for you.
You can either do the inspection yourself, or hire a private company to do that for you. Again, it should be said that most of the buildings in Dubai are good in terms of quality. It is your choice to do the inspection or not.
Tip #7 Buy Property in Dubai– Price Evaluation
Now that we are done with the position, project and building search, let’s go to the real work. Understanding how the price evaluation in real estate market of Dubai works is vital.
If you are an international investors coming from a very expensive real estate market such as Singapore or Hong Kong, you might find the prices in Dubai very affordable. However, this isn’t the right criteria for comparison.
So, properties in Dubai are affordable in comparison to other main cities in the world. However, to understand the real value of a property, you need to have a right person who can advise you.
One way to find out about the right price of property is to look at recent sale records of similar properties in the same building/ neighborhood.
Tip #8 To Buy Property In Dubai– Financing Options
Historically, Dubai’s real estate market has been driven by the cash buyers. But, this is changing now, and the number of finance buyers in Dubai is increasing significantly.
This trend will continue in the future as business owners and expatriate workers in Dubai tend to buy property instead of renting one.
In the UAE, there are 3 categories of home finance products.
Home Loan For UAE Nationals
For the citizens of UAE (Emirati), there’s an opportunity to get up to 85% LTV for the first real estate purchase. This brings them down payment to just 15%.
Home Loan For UAE Resident (Expatriate)
For the residents (expatriate) in UAE, there’s a chance to get up to 75% LTV for the first real estate purchase. So, they will have to come up with 25% down payment.
Home Loan For UAE Non-Resident
For non-residents, there is a mortgage option. In this case, the banks can offer them a maximum of 50% LTV. So, as a non-resident, investors will have to come up with 50% down payment.
Also, it should be said that we will see more financing options and flexibility in the UAE, as the country is evolving towards becoming a better place.
If you are thinking how much interest is charged by banks in UAE for home loan, it is normally from 3% to 5%.
Tip #9 Buy Property In Dubai– Title Deed Transfer
If you are wondering how the transfer of property works in Dubai, it should be said that it can be done within just an hour!
Validate Title Deed
Validating the title deed would be your next step (actually your real estate agent will do it for you). The seller should give you a copy of the title deed, and you should validate it through official website of Dubai Land Department.
Sign The MOU
The next step is signing the Memorandum of Understanding (MOU). Your realtor will prepare the MOU. Then he will advise you and the seller to decide what additional clauses should be added in the agreement. Then both of you and seller should sign it.
This MOU is automatically registered with the government. You and the seller will give a 10% security check to the real estate agent as a guarantee and then decide on a date when the transfer should be done.
Visiting Trustee/ Transfer Office
On the decided date, you will meet your seller and also your realtor in trustee office. You and the seller should give your documents to the officer so that he can verify identities and terms of the purchase.
The buyer should make the payment (in the form of Manager’s check) to the seller. The officer will verify this payment. You will also make a Manager’s check in the name of Dubai Land Department for 4% of total sales value (this is the transfer fee).
Issuance of Title Deed
Once all of the documents are approved by the trustee officer, he/ she will initiate the request for ownership change to Dubai Land Department. You will receive your title deed in this office, and it will take only 30 minutes!
Tip #10 Buy Property In Dubai– Associated Costs
As discussed earlier, there are some costs that you should pay when you want to buy property in Dubai. Let’s find out what other costs can be…
The purchase price of the property is the first cost that you should bear. There are some options to pay the property price. You can either pay in the form of manager’s check or choose another option that is getting finance from the bank. In the case of mortgage, the bank will make part of the payment, and a bank’s representative will be present at the time of title transfer.
DLD fee is the second cost that you must know about. It is 4% of total property price that is payable to Dubai Land Department.
If you are taking a mortgage from bank, there will be a valuation fee in the amount of AED 3,000 that you should pay. This amount can be different from bank to bank.
Loan Processing Fee
As well as the valuation fee that you will pay to the bank, there will be 1% processing fee charged by bank on the amount of loan that you are taking.
Mortgage Registration Fee
The third cost will be 0.25% of the total property price. This will be applicable in the case that you are getting a mortgage. Dubai Land Department charges 0.25% for the mortgage registration.
The trustee fee will be the fourth cost. This fee is AED 2,000+VAT for the properties that are equal or below AED 500,000 and AED 4,000+VAT for those properties being above AED 500,000.
Service/ Maintenance Fee
Service fee/charge is also another thing that you must know about. You should pay the service charge on an annual basis to the company that is responsible for managing the building and common areas.
Property Management Fee
If you are not living in Dubai and want to have someone who can manage your property in your absence, then you can hire property management companies. The fee for such management companies is at least 5% of annual rental income.
Home Insurance is also another cost that is optional. It is not necessary but recommended.
These are 10 essential things to know when you decide to buy a property in Dubai. You can explore the latest properties for sale in Dubai in dxboffplan.com, and we will help you through the purchase process…