Investing in Dubai real estate
Investing in Dubai has been made accessible to everyone and more and more people are beginning to realize this. Investing in Dubai is possible from as little as €120,000. If new construction is purchased there are different payment plans available. Some payment plans make it possible to pay a balance over a pre-agreed period even after completion, when rental income is already being generated. It is possible in Dubai to sell property when 30% of the purchase price has been paid.
Anyone is free to buy property in Dubai in the locations designated for this purpose, in some locations only locals (Emirati) are allowed to buy. No company needs to be set up and the property becomes the full property of the buyer. Financing from an Emirati bank is possible. In Dubai, a maximum of 70% may be financed from an already existing building.
There are approximately 10,000 “real estate agents” working in Dubai, more than half of whom do this work in addition to a full-time job. Many people in Dubai quickly obtain their RERA license (real estate license) in order to be able to refer buyers to developers when the time comes. As a result, many real estate agents in Dubai do not know exactly what they are doing. As an investor, you would do well to do very careful research when dealing directly with a real estate agent or developer in Dubai.
If you want to be sure of a hassle-free purchase process, it is best to do business through a Dutch intermediary who will guide you through the entire purchase process.
Investing in residential real estate in Dubai is possible in new construction and in existing buildings.
Investing in off-plan
Investing in new construction is interesting for those investors who want to make a long-term investment or for investors who want to flip properties (more on this in a future blog). New construction projects usually have a construction period of 3 years, this means that no direct return in the form of rental income is generated during the first 3 years after purchase. However, indirect returns are generated in the form of value appreciation. As mentioned in a previous blog, the new construction projects in Dubai are put on the market very sharply and during construction the projects increase in value more and more towards completion, this is because the property can almost be rented out and thus will also generate a direct return.
Starting prices for new construction vary by location, and the purchase price can be paid in installments. These installments vary by project and developer. Some developers offer their projects furnished. Investors pay the purchase price to an escrow account, which is managed by the government. The developer receives the money only after they deliver the project. This serves as assurance to the investor that the project will actually be built, and if not, that they will receive back the amount they paid. When new construction is purchased the buyer pays 4% to the Dubai Land Department (DLD), this is the cost of the buyer).
Investing in ready built
Investing in existing construction is of interest to investors who want to see immediate returns in the form of rental income from the time of purchase. Starting prices for existing construction vary by location and the purchase price can NOT be paid in installments. Existing construction is typically not delivered furnished. The buyer's cost when buying existing construction is slightly higher than new construction, there is a 4% Dubai Land Department fee, 2% real estate agent's fee and relatively small amounts for land registry and attorney's fees.
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