The UAE has one of the most unique property markets in the world, with Dubai standing out even more from the other Emirates. What makes the Dubai property market so exceptional is how they have structured their real estate laws, especially with regard to foreign investors. The UAE Golden Visa and Freehold Areas make Dubai a great investment choice.
These key policies are the bedrock of the thriving real estate market in Dubai. Fortunately, Mirabello Consultancy specializes in global investment and residence by investment plans catered to their individual clients. There are many ways you can qualify for a residency visa through investment and each opportunity has its own related costs.
- Property investment is one of the best ways to obtain a long-term residency visa in Dubai.
- There are many incentives and opportunities that make Dubai a very attractive location for foreign investors.
- Dubai has some of the most investor-friendly tax laws in the world, including no property tax, or rental income tax.
- There are various factors that affect the costs of houses in Dubai, one of the largest being new government policies that aim to establish Dubai as a world leader in many industries.
How Property Investment Can Lead to Residency in Dubai
The UAE Golden Visa is one of the most innovative visa programs in the world, and it is an attractive option for your next investment location. There are many ways to qualify for the UAE Golden Visa, chief among them is the track offered to property investors. To a large extent, this Visa is aimed at real estate investors.
To qualify for a UAE Golden Visa through property investment, there are two options:
10-Year Long-Term Visa
To qualify for a 10-year residency visa through real estate investment, you will need to invest a minimum of $544,000 on property in Dubai.
Two-Year Long-Term Visa
Investors can opt for a shorter 2-year residency visa if they don’t want to commit to the amount required for the 10-year option. This amount varies on a project-to-project basis and is also influenced by the amount of investors involved in the transaction.
Some of the incentives offered by the UAE Golden Visa include:
- A long-term residence visa (valid for 5-10 years) that is not reliant on the holder residing in the UAE.
- Property ownership rights allow foreign nationals to buy and sell property that they own.
- Significant tax reductions and cuts.
- No sponsor is needed, which allows for freedom of choice in your investments without the consent of a partner.
- Discounted healthcare and other civil services are available to the UAE Golden Visa holder.
For an in-depth look at all the incentives and reasons to apply for a UAE Golden Visa, have a look at this article.
Initial Purchase Costs
Real Estate Agent Commission
One of the first things you will need to do as a first-time investor is to find a real estate agent who knows the Dubai real estate market. These real estate agents charge a fee but are considered worth the investment. For residential properties, the fee is typically 2% of the sale price and is paid by the buyer. But this fee can be higher (up to 10% of the total sale price) for different properties.
Initial Deposit
Once you have found a property, you will need to collaborate with your agent to negotiate a deal that you and the seller are happy with. Typically, a deposit of 10% of the property's value is paid as a fee to the seller. This fee is to secure the transaction and show commitment to the transaction.
Property Registration
While Dubai does not have any income tax or property tax, there are some government fees. Once ownership is transferred between buyer and seller, a 4% fee (of the purchase price) needs to be paid to the Dubai Land Department, as well as a US$158 fee to process the transfer.
Loan Registration
It is also important to note that if the property is bought with a bank loan, a 0.25% fee needs to be paid to the Dubai Land Department to register the mortgage on the property.
First-time owner VAT
Dubai does not charge VAT on residential properties. But for a first-time owner of a new development (like a newly built hotel), a VAT fee is charged.
Additional Costs for Property Buyers in Dubai
Many of the additional costs are situation-dependent and that is why assessing your options is so important. While you consider all the new opportunities presented by Dubai, it is important to consider the additional fees that might be involved in property purchases.
Legal Fees
While lawyers are not strictly necessary for property transactions, they simplify the entire process, and their involvement can be pivotal in ensuring the investment is successful.
Dubai Electricity and Water Authority Fees
These fees range in amount, depending on the type of property.
Mortgage Fees
Mortgage and bank fees are investment-dependent. Most creditors will require a fee for administration and assessing the property value.
Ongoing Costs for Property Owners
With any investment, you need to consider the long-term costs involved, especially with property investments. One of the great things about investing in Dubai's real estate is their approach to tax. You will not have to pay tax on your personal income, rental income, capital income, or property.
Aside from the obvious long-term fees such as water and electricity or maintenance, one of the fees you will need to pay is the Dubai Housing Fee. This fee is an annual fee that all citizens are liable for. The fee is used to finance the civil services in Dubai, such as road city cleanup and healthcare services. This fee appears on the monthly utility bill to the Dubai Water and Electricity Department. You will also need to pay for insurance on your property.
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Property Financing and Mortgage Options
Investors cannot always make an outright cash purchase for a property. Fortunately, with Dubai's unique approach to foreign investment, it is possible to finance your property. However, applying for financing as a foreign investor can be challenging, and a large down payment on the property is required from the investor.
While the specific criteria to qualify for a mortgage in Dubai differs at each bank, the general criteria apply:
Minimum Income Requirements
You should earn the minimum income requirement of the financial institute. It ranges from US$2,700 per month to US$4,000 per month.
Mortgage Length
The length of the mortgage period cannot exceed 25 years.
Credit Score
Investors need a good credit score. The exact minimum score varies but a score lower than six hundred is considered not good enough.
Age Limit
Certain financial institutes have specific age criteria that investors need to meet.
While options may differ between financial institutes, the two major mortgage types offered to foreign investors are fixed-rate mortgages and variable-rate mortgages.
When considering property financing as an option, being aware of the costs involved, that are not immediately apparent, will benefit you. The costs include:
Initial Down Payment
First-time investors will need to make a down payment of 20% minimum of the property's price. If the property's price is more than US$1.4 million, a minimum down payment of 30% of the property's price is required.
Bank Fees
These fees include administration fees to process the mortgage and property valuation fees.
General Property Costs
Along with mortgage costs, you will need to factor in the other costs associated with buying a property in Dubai.
Factors Affecting Prices
One of the largest factors influencing property prices in Dubai is policies implemented by the government. These policies include things like favorable tax laws, the UAE Golden Visa, or numerous free zones designated across Dubai. Policies like this have shown a measurable increase in the price of property in Dubai, as well as the number of annual transactions.
Not all policies are directly real estate focused but have an indirect influence on housing prices throughout the economy. The gradual diversification of the economy by the government has helped fuel Dubai's strong economic growth over the past years. This general increase in quality of living and influx of investment has made Dubai one of the most sought-after places for business establishment and relocation.
Innovations in technology and renewable energy play a key role in Dubai's overall market. This is due to the government's drive for sustainable building and integration of renewable energy. Innovations in these sectors have led to Dubai establishing large-scale sustainable building projects like Masdar City. The integration of technology has also greatly assisted in combating crime. Dubai is considered one of the safest cities on Earth.
The tourism and hospitality industry also plays a key role in overall property prices in Dubai. Tourism has been growing steadily over the past few years. This increase in tourism has given Dubai exposure to the public. This increased interest in the city has undoubtedly made a significant impact on the Dubai property market.
How Mirabello Consultancy Can Help You with Buying a Property in Dubai
Whether you are a first-time investor or are just looking into Dubai for your next investment, the key to success is often about having strong support. In a property market like Dubai, it can be daunting to figure out how much a house costs or whether you will need to pay extra conveyancing fees.
That is where Mirabello Consultancy can help you. Mirabello Consultancy Specializes in citizen-by-investment programs and tailors their programs on an individual, client-to-client basis. This makes them invaluable when trying to figure out the complexities of the Dubai property market.
Dubai offers the most exciting real estate opportunities in the world. It is also accompanied by many complexities and nuances. With Mirabello Consultancy, investing in your future is achievable. With expert support, foreign investment does not have to be daunting.
FAQ
Dubai has a well-documented legal system but it has some complexity. In terms of hidden costs, you can expect various administration fees and conveyancing fees. You won’t be expected to pay much tax on a residential property in Dubai. There are, however, some levies such as the DEWA (Dubai Electricity and Water Authority) fee.
To get a better understanding of the hidden costs and processes involved with investing in the Dubai property market, Mirabello Consultancy can be invaluable. They are able to offer solutions tailored to your needs, you can book a free consultation for more information.
Financing a property in Dubai has initial costs, such as a Bank Arrangement Fee and a Property Valuation Fee. The specific loan arrangement will need to be determined by the financial institution and is situation-dependent. To find out more about buying a property in Dubai and how much it costs, read this in-depth guide.
No, there is no property tax in Dubai. This is one of the reasons why buying property in Dubai is such an attractive opportunity for foreign investors. To read more about the tax system in Dubai and its benefits, read this article.
Yes, the UAE Golden Visa offers long-term residence through real estate investment. Mirabello Consultancy specializes in residency-by-investment programs and can help you clear up any questions you may have.
