Dubai is one of the few nations in the Middle East where expats are allowed to buy real estate, whether a condo in one of the new developments popping up or land on which they may build a future home. While Dubai is an increasingly popular haven from Middle Eastern chaos and a new center of world trade and commerce, buying property here is not always simple. Here are three essential tips for finding great real estate in Dubai.
Decide Why You Want to Buy in Dubai
Are you an expat deciding to put down roots in Dubai? Buy a home that suits your long-term needs, such as a condo in a neighborhood you’d like to live in for the rest of your career or a house in the suburbs with enough space for your family. If you are considering an investment property for rental income, buy a one or two bedroom flat that many expats and locals would be willing to rent, not a villa that is prestigious to own but won’t provide a good return on the investment.
Do Due Diligence
Before you buy a property, do your due diligence. Research the reputation of the developer, since some developers use shoddy materials and have a poor quality of work. Others don’t complete on time, while a few are at risk of going bankrupt. You also want to review the currently completed projects by the developer if the unit you want to buy hasn’t been completed so that you have a realistic expectation of what the finished property will look like. If you are buying a pre-owned home, the property should be surveyed. Have a registered professional surveyor check the property for maintenance needs, required repairs, damage or shoddy workmanship. These issues become your responsibility when you buy it, and you want to know about them in advance so that you either lower the purchase price to take the repair costs into account or can find a property that is not a “fixer-upper”.
Another reason to have the property surveyed before you formally enter the buying process is to avoid surprises when you apply for financing. If the bank evaluator says the property is worth more than expected after you’ve already put down a deposit, you could be required to put up a much larger down payment immediately. And if you don’t have a well-written contract, you’d lose the deposit on the property, especially if you can’t secure financing for a home worth much more than initially expected.
Understand the Purchase Process for Dubai
Dubai is an attractive real estate market for people in the region because it is one of the few nations that allows foreigners to buy real estate instead of just rent. Property can be bought from the developer “off-plan” or a private seller. When buying from the developer, foreign buyers must submit a copy of their passports and put down a reservation fee of five to fifteen percent of the property value. This is similar to the down payment on a home, but if your contract doesn’t have a specific opt-out clause, you lose this money if you can’t come up with financing for the rest of the property. Then the Sale and Purchase Agreement is drawn up. If the property is still under construction, the SPA contains a completion date and payment to be made if the completion is delayed after that point.
When someone purchases the property from a private seller, a Memorandum of Understanding or MoU is used. The standard down payment for that type of real estate purchase is 10%. Once financing for homes or apartments for sale is secured, the deed for the property is transferred to the new owner. You can save yourself significant hassle if you secure pre-approval from a bank before you start shopping for a new home so you don’t have to worry about losing out on a deal for lack of funding. You want to understand the process of buying property in Dubai so you aren’t surprised by the 2% land registration fee or maintenance fees required of those who buy apartments for sale.
Foreigners are advised to have professional legal advice when buying property in Dubai. The best choice is a conveying company registered with the Dubai Land Department. This helps protect both the buyer and the seller. For example, legal experts know how to verify that the title is free of liabilities or debt.
Think about why you want to buy real estate in Dubai before you start shopping for a new home or piece of land. Do your due diligence with a surveyor and research the developer, and work with a reputable legal expert to avoid problems with the contract. Learn about the purchasing process in Dubai before you draw up a contract and put down a reservation fee. And secure pre-approval for the mortgage before you enter the contract to avoid problems.