Where to Invest in Dubai?
The modern gateway between the east and west of the world, Dubai is the reigning hub of international business and trade. The property market of this advanced municipality has been attracting investors around the world for years.
Considering the long-term demand and profitability of the real estate industry, people in and outside Dubai are showing interest in buying a property in UAE. While property prices range from low to high depending on the size and type of structure, you need to understand the additional fees for buying property in Dubai.
One thing you must always keep in mind is surely, the location. This dictates the ease of access you will have to major Points of Interest or hotspots in the city. That’s why investing in an area such as Jumeirah Beach Residence (JBR), Dubai Marina or Business Bay is the favourite choice for investors this year.
Dubai offers a variety of property types across its wide range of neighborhoods, which are attractive not only for those wishing to live there, but also for property investors. From luxurious apartments with waterfront views, shopping malls, and exciting restaurants to residential communities featuring extremely urban residences along with 5-star amenities and services.
In addition, Dubai’s skyline has changed dramatically for the past 10-15 years. It has been mainly characterised by skyscrapers informed by varied streams of contemporary architecture. Yet, between their thoughtfully planned urban spaces and innovative architecture, Dubai aims to create engaged and involved communities where people can work and live harmoniously. So, when investing in these properties, always make sure to assess your desired property in terms of quality. Look at, durability, utility and of course, beauty.
Next, rental yields and resale value, are two of the most important considerations for mid to long-term investors. Investors – both in the UAE and overseas – are constantly eyeing the UAE real estate market as it remains lucrative with attractive property prices, payment plans and more. One thing to remember is, while larger properties often command higher rents, they also often come with higher service charges and a more significant initial outlay. All of which combine to determine your ROI.
Dubai’s property market is seeing a steady growth in demand for residential properties and with so many property options out there, it can be difficult to choose one to invest in. A common mistake amongst new property buyers is committing to developers with little or no established credentials. You must do your research and find out as much information about developers and their previous projects as you can.
Buying property in Dubai fees includes Dubai Land Department (DLD) fees. It can be considered as a one-time tax paid to the government. DLD fee is 4% of the total price of the property. DLD fees in Dubai are legally divided between the buyer and seller which is 50% each. However, in most cases, it is entirely paid by the property buyer. Along with the mandatory DLD fees, buyers are also required to pay the property registration fees, which depend on the value of the property. The buyers purchasing property with the help of bank loans also need to pay the mortgage registration fees with DLD.
Here is the division of transfer and registration fees:
DLD Fees = 4% of the property price + Admin fees (AED 580 for apartments and offices, AED 430 for land, AED 40 for off-plan)
Registration Fees for properties valued below AED 500,000 = AED 2000 + 5% VAT
Registration Fees for properties valued above AED 500,000 = AED 4000 + 5% VAT
Mortgage registration fees Dubai Land Department = Up to 0.25% of loan amount + AED 290
It is crucial to know that DLD fees need to be paid within 60 days otherwise the purchase stands canceled. Also, people not opting for bank loans need do not pay any mortgage registration fees. Property buyers have to pay additional fees for buying property in Dubai. However, there are many fees aside from the property service charges, such as property transfer and registration fees, agency fees, security deposit, insurance fees, and Dubai electricity and water authority fees.
Service charges in Dubai are calculated on a per square foot basis, and for villas the charge is based on the plot area. The total cost of service charges that are applied to a property varies depending on various factors such as:
Community location – The neighborhood that the property is located in.
Project type – The building/sub-community in the neighborhood.
Usage of the property – The purpose for which the property is purchased. This includes retail, commercial, residential, offices, villa, serviced apartments, and so on.
Downtown Dubai is noted for having the highest service charges because it is one of Dubai's most prestigious areas. The minimum fee is AED 11.01 psf on average across the area, however this isn't a particularly useful metric because the actual charge can be more than three times that depending on which tower you're in.
Some of the most well-known projects in Downtown Dubai, as well as their associated fees, are listed below. The Burj Khalifa, unsurprisingly, stands at the top of the list.
Burj Vista - AED 17.44 psf
Vida Residences Downtown - AED 23.79 psf
The Address Fountain Views - AED 25.42 psf
The Address Downtown - AED 41.35 psf
The Address BLVD - AED 28.03 psf
Burj Khalifa - AED 67.88 psf
There is no property tax levied in Dubai, nor do you need to pay any inheritance or income tax. However, property buyers have to pay a stamp duty which ranges within 1% to 7% of the property purchase price in the UAE.
We hope you found this blog informative and handy.