Despite the world’s ongoing economic difficulties, Dubai continues to be a popular destination for people wishing to invest in property, attracted by its luxurious lifestyle and warm climate.
Viewed by many as a playground for the super-rich, property prices in Dubai are still low compared to those in Europe and the US.
The real estate market has picked up in recent times, after a minor slump due to global economic problems, and purchasing property in Dubai is relatively simple, compared to other foreign markets.
For foreigners wanting to buy property in Dubai, there are some issues that need to be considered.
Dubai City is made up of two main parts, Deira and Bur Dubai, Deira being the modern day city-centre, and Bur Dubai being more traditional. Popular residential areas for foreigners looking to buy property in Dubai include the very upmarket Jumeirah, situated on the coast, and Al-Garhoud, nearer to the airport.
A booming property market though, has meant that the popular property hotspots are sprawling outwards. The western side of the city is where most property is being constructed, nearer to the main facilities and white beaches.
OWNING PROPERTY IN DUBAI
Up until 2002, only citizens of the United Arab Emirates, and certain other people from the Arab Gulf Cooperation Council, were able to buy property in Dubai. Even when this law was altered, there was no federal legislation introduced to deal with freehold property ownership for foreigners.
This meant that for foreigners buying property in Dubai, there was always and element of uncertainty when going through with the purchase.
Originally, when a foreigner purchased property in Dubai they would be given a deed by the property developer. In effect, these companies are run by the Dubai government. The market continued to grow under this system, but this way of doing things was considered unsatisfactory by many.
STYLE OF HOME
Villa and apartments are the two kinds of property in Dubai that are favoured by foreign buyers. These properties are often found in complexes, with security and leisure facilities for residents, such as swimming pools, saunas and gyms.
Dubai’s property boom really began to gather pace in 2002, when by royal decree, foreigners were legally entitled to purchase property for the first time. Many of the new properties in Dubai are luxurious and extravagant, in terms of design and facilities.
Palm Island is a development that has been built in a palm shape off the coast of Dubai. Extending 5m into the sea, this development has actually extended the coastline of Dubai by 60km.
FREEHOLD PROPERTY LEGISLATION
In 2006, a law was passed by the Dubai government, meaning that foreigners could own freehold property, in areas the ruler has designated. The new law also meant that foreign owners of property in Dubai could rent out, and profit, from the sale of their property.
Freehold ownership means that property owners have complete rights with regards to the properties they have purchased. Despite the legislation, some developers continue to sell properties leasehold, and the duration of the lease is stated in the contract.
THE PURCHASING PROCESS
The process of purchasing property in Dubai is quite informal, compared to other countries, as the property market is relatively new. In most cases, a basic sales contract is the only paperwork that needs to be completed. A reputable, local lawyer should always be used to study this document, as when it is signed it will be legally binding.
When purchasing freehold property in Dubai, survey fees are not incurred in most cases. There is no stamp duty in Dubai for buyers. The only other major cost is a land registry fee of 1.5%, and this has to be paid when the property has been completed.
There are several options for foreigners wishing to buy property in Dubai. Buying the property outright with cash is a method favoured by many, as this simplifies proceedings, but some people will not want to tie up a large amount of capital in this way.
Buyers may opt to remortgage their property in their home country, or arrange a mortgage through a lender in their home country. A remortgage is seen as a straightforward way of financing the purchase as equity is released and the property can be bought in one transaction. But, this is only an option for people who completely own outright their other home.
There are many options for those wanting to purchase property in Dubai. The word “luxury” has become synonymous with many of the new property developments in this part of the world, but prices are still lower than in western countries. However, prospective buyers should always do their research, and try and deal with reputable developers and lawyers.