Buying a property in Dubai: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

Yes, the analysis of Dubai's property market is included in our pack

Considering buying real estate in Dubai? You're not alone!

Many people are fascinated by Dubai's futuristic allure and dream of owning a luxury penthouse or a modern apartment in this city.

Would it be a profitable investment, though? Are property prices increasing in Dubai? How much does it cost? Is it better to invest in Downtown or Dubai Marina? Is there any hidden tax? Which places offer rental yields exceeding 7%?

We have all the answers you need.

The SandsOfWealth team has thoroughly explored this market. As a matter of fact, we've gathered all our findings in a pack. Get it now.

In the lines below, we will share some of this knowledge.

How is the real estate market in Dubai?

Is the property market doing well or poorly? People disagree. Instead of listening to opinions, we prefer to look at data and stats to find the real answers.

Types of properties

In Dubai, there is a diverse range of properties for sale to meet various preferences and needs.

These include luxurious apartments and villas, suitable for individuals and families, offering modern amenities and stunning views.

Additionally, there are townhouses and penthouses that provide a mix of comfort and style.

Dubai also features commercial properties like offices and retail spaces, catering to business requirements.

Whether you're looking for a residential oasis, a vibrant urban setting, or a workspace, Dubai offers a wide array of property options for sale.

Better to buy or rent?

(If you're buying for yourself and not to rent out)

If Dubai has caught your heart as your city of choice, you might be considering whether it's better to buy a property or opt for renting in this dynamic UAE metropolis.

Without a doubt, it's better to buy if you want to benefit from the potential capital appreciation of the property in Dubai.

Want to make a good decision? Check out the property price-to-rent ratio. This helps you understand the connection between rental income and the property's current price in terms of years.

According to Numbeo, the property price-to-rent ratio in Dubai is around 8.99, which is one of the lowest in the world.

Simply put, on average, you could buy a property with just 9 years' worth of rental payments. Worth buying.

Property prices in Dubai

On average, according to the last data from Federal Competitiveness and Statistics Authority (FCSA), purchasing a property in Dubai should cost you around $6,600 per square meter.

Obviously, there are some big differences. The value of a square meter for a penthouse in Dubai Marina might differ from a villa in Emirates Hills. We actually offer a more in-depth analysis in our pack for buying property in Dubai and in the UAE.

To give you some context, it is 2.9 times less than the property prices in the center of New York.

However, housing prices in Dubai are higher (86%) than in Abu Dhabi.

The most expensive neighbourhoods in Dubai are probably Downtown Dubai, Emirates Hills, Palm Jumeirah, and Jumeirah Islands, while the cheapest areas in Dubai are likely Al Barsha, Al Warqa, International City, and Discovery Gardens.

Trends

First and foremost, we have to acknowledge that the United Arab Emirates is, today, a very stable country. The last Fragile State Index that has been reported for this place is 39.1.

It is something to have in mind when wondering whether it's a good investment to buy a property in Dubai.

Besides that, if we look at the IMF's GDP forecasts, the UAE's economy is expected to soar by 17.6% in the coming 5 years, resulting in an average GDP growth rate of 3.5%.

If you intend to invest in real estate in Dubai it's a good thing because a positive growth rate (usually) leads to higher incomes for citizens, enabling them to invest in real estate, which boosts demand and prices for properties.

Also, in the UAE, the average GDP per capita has changed by 3.8% over the last 5 years. Despite being minimal, there is still some observable growth.

This is a strong positive signal: housing prices in Dubai might become more expensive in 2024 and later on.

Also it's good to know that, according to the UBS Global Real Estate Bubble Index, the property market in Dubai is also fairly priced, with an index value of 0.16 (values below 0.5 suggest fair valuation).

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in the UAE right now.

Buying property in Dubai

Buying real estate in Dubai can be difficult due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Dubai and in the UAE.

Buying process

In our pack, we've laid out all the steps involved in the buying process, including the required documents, taxes to be paid, and guidance on finding properties.

Now, we're giving you a more straightforward version to help you grasp the information more easily.

This is the step-by-step process to purchase a property in Dubai:

1. Research the property market and set a budget.
2. Engage a registered real estate agent approved by the Dubai Land Department (DLD).
3. Choose the property and sign a Memorandum of Understanding (MOU) with the seller.
4. Pay a reservation fee (typically 5-10% of the property value) to secure the property.
5. Conduct a property due diligence, including Title Deed verification, No Objection Certificate (NOC) from the developer, and clearance from the DLD.
6. Draft and sign the Sales and Purchase Agreement (SPA) with the seller. Include all terms, conditions, and payment schedule.
7. Pay the agreed-upon down payment (usually 15-25% of the property price) to the seller.
8. Obtain an NOC from the developer confirming that there are no outstanding fees on the property.
9. Transfer funds to the seller's account through a manager's cheque or bank transfer.
10. Register the property with the Dubai Land Department and pay the registration fee (usually 4% of the property value) and any other associated fees.
11. Pay the remaining balance and any additional costs, such as agent fees and transfer fees.
12. Once the transfer process is complete, collect the property title deed from the Dubai Land Department and become the official owner of the property.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in the UAE.

Make a profitable investment in Dubai

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Where to find a property

You may embark on your property search in Dubai with the help of these websites:

• The Capital Real Estate Dubai - A premium real estate agency in Dubai, providing a diverse selection of properties for sale and investment.
• Bayut - Offering detailed property listings, market intelligence, and helpful guides for the UAE real estate market.
• Zoom Property - A leading property portal in the UAE, offering a comprehensive search platform for buying, renting, and exploring new real estate projects in Dubai and other cities.
• Houza - A UAE real estate platform, providing properties for sale and rent, including commercial properties and short-term rentals.
• Emirates Estate - Emirates.Estate is a platform for verified property listings in the UAE, offering a wide range of options from developers and real estate agencies.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in the UAE.

What you can get

As mentioned before, the average price per sqm in Dubai is $6,600. A 1-bedroom property of 60 square meters would cost around $396,000, while a 2-bedroom of 85 square meters would cost around $561,000.

Obviously, property prices will change based on both the property itself and its location.

Prices tend to be higher in the top areas of Dubai. A residence in Palm Jumeirah might cost around $1,600,000, whereas a property in Downtown Dubai could be priced at $700,000.

But, there are cheaper places. You might discover a property in International City for $510,000, or you could locate a house in Al Qusais priced at $420,000.

We give more details about property types and areas in our full pack for buying property in the UAE.

Risks and pitfalls

Here are the main pitfalls specific to buying property in Dubai:

• Freehold vs. Leasehold confusion leading to limited ownership rights.
• Escrow account misuse, risking funds for off-plan properties.
• "No Objection Certificate" requirements for certain nationalities affecting property eligibility.
• Short-term rental restrictions in certain areas.
• Hidden service charges for maintenance in gated communities.
• Non-transferrable mortgage offers, limiting financing options.
• Incomplete infrastructure in emerging developments.
• Strict regulations on property modifications and renovations.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our United Arab Emirates Property Pack

Living in Dubai

Living in Dubai offers a luxurious lifestyle with excellent amenities, making it an ideal place to buy property.

Cost of living

The cost of living in Dubai is generally higher than in other parts of the world, due to its high-end lifestyle and luxury goods. However, there are still many affordable housing options and consumer goods available.

Here are some examples to better understand the cost of living in Dubai, United Arab Emirates:

• Rent for a one-bedroom apartment in Dubai Marina: $2,500 per month.
• A meal at a local restaurant with "Al Harees," a traditional Ramadan dish: $20.
• Monthly Nol card for Dubai Metro and buses: $100.
• Utilities (electricity, water, cooling) for a small apartment in Jumeirah: $220 per month.
• A bottle of local non-alcoholic drink "Jallab": $3.
• Shawarma sandwich at a popular local eatery like "Al Mallah": $5.
• Taxi fare for a short city trip using "Careem" app: $12.
• A cup of traditional Arabic coffee "Gahwa" at a café in Al Fahidi Historical Neighborhood: $7.

Neighbourhoods and spots

Since we want to give information in a simple way, we made a table that shows the neighborhoods in Dubai. For yields, prices and rents, check our property pack.

Life in Dubai

Dubai is an important hub for international trade and finance, with a highly diversified economy that is based largely on oil and gas exports. It is also a major centre for tourism, hospitality, and real estate, and is home to numerous multinational corporations.

What expats usually like the most in Dubai is the combination of modern infrastructure and amenities with the rich culture of the Middle East, as well as the great job opportunities and tax-free salaries. Additionally, they enjoy the beautiful beaches, deserts, and year-round sunshine.

An important point to note is that Dubai is an extremely safe city - the crime index is around 16, which is an exceptional score. Dubai's culture of respect, combined with a strong police presence, has resulted in almost no crime.

A good point for a property investor - Dubai has an extensive mass rapid transit system known as the Dubai Metro.

Finally, access to healthcare in Dubai is good, with a Healthcare Index of 69. You probably know that when there's a solid healthcare setup, it makes a location more appealing, which benefits real estate.

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Renting out in Dubai

For those aiming to buy property solely for renting out and earning income.

Long-term

Tenant Profiles in Dubai

According to the data reported by Wikipedia, the home ownership rate in the UAE is 28%, which is very low.

It means that, if you decide to buy and rent out in Dubai, there will be a huge tenant pool. It's a good thing.

If you decide to buy and rent out to long-term tenants, you should target expats, professionals, and families who are looking for a permanent residence in Dubai. Short-term tenants in Dubai are typically tourists, business travelers, and those looking for a short-term stay.

Here is a little summary table we've made for you.

Rental yields

These days, Dubai presents attractive opportunities in terms of rental yields. In fact, you can easily achieve yields above 9% due to the city's strong rental demand and high demand for quality housing.

The best rental yields in Dubai are typically found in properties in areas that are close to business hubs and metro stations. This is because these locations are in high demand from tenants looking for convenience and easy access to transport links.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Short-term

You could also decide to rent short-term to tourists, business people, or those on vacation in Dubai. Additionally, you could also rent to students studying in Dubai for a semester or two.

If you decide to go with that option, look for properties in Downtown Dubai, Dubai Marina, and Jumeirah Beach Residence. These areas are popular for short-term rentals and offer a wide range of accommodation choices.

You will have some competition though - there are around 24,000 Airbnb listings in Dubai. The average daily rate stands around $164, which is quite high.

You have the opportunity to generate a nice additional income stream then. Based on feedback from online testimonials and data analytics platforms such as AirDNA, Guesty, and Inside Airbnb, people who offer short-term rentals in Dubai can make around $1800 per month. Also, the average occupancy rate is estimated at 57%.

Is it worth buying real estate in Dubai then?

Buying property in Dubai can be a fantastic investment if you're in it for the long haul. The city's low property price-to-rent ratio suggests potential for capital appreciation over time. Dubai's stable economy, with expected growth, indicates a favorable environment for real estate investments.

Moreover, the fair valuation of the property market reduces the risk of a sudden crash, making it a safer bet. If you plan to rent out your property, Dubai's high rental yields, particularly in areas near business hubs and metro stations, can offer a substantial source of income.

However, it's crucial to tread carefully. Dubai's property market can be challenging to navigate due to a lack of reliable information, so thorough research and expert guidance are essential. Additionally, if you're looking for quick returns or lack the patience for potential market fluctuations, Dubai may not be the best choice.

Ownership restrictions and hidden costs can also catch you off guard if you're not well-prepared. While Dubai's property market has its appeal, it's not a one-size-fits-all solution. It's an excellent option for long-term investors who understand the market's nuances and are prepared for both potential rewards and risks.

Make sure you understand the real estate market in Dubai

Don't rush into buying the wrong property in the UAE. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.