Answers to the most common questions from novice investors buying property in the UAE

Investing in property in the UAE can be a lucrative venture as the country remains one of the most attractive destinations for property purchases. Such investments help to protect funds from inflation and generate income from rental or subsequent resale. Property in Dubai and Abu Dhabi is the most popular choice for buyers, with annual appreciation. In addition, housing is in constant demand due to population growth.

Restrictions on foreign buyers of apartments and houses in the UAE are minimal. Foreigners are free to purchase freehold properties in specially designated freehold zones. They can also obtain mortgages from local banks, although terms may vary depending on the institution and the status of the borrower.

For rental properties, the country has a regulated system that protects the rights of both landlords and tenants. The average return on investment in the most popular emirate, Dubai, is 5–8% per annum and can reach 10% in the most profitable projects.

Potential buyers are interested in many nuances, from the property selection process to taxes and fees. In this article, we answer the most frequently asked questions.

Content:

• Can foreigners buy property in the UAE?
• What are the risks involved in buying property in the UAE?
• What are the additional costs of buying property in the UAE?
• What do you need to know when choosing an apartment or house and proceeding with the transaction?
• Can foreigners get a mortgage?
• How do you rent out property in the UAE?
• Why do investments in the country offer high returns?
• Answers to your questions
• Your comments

Can foreigners buy property in the UAE?

Yes, in the UAE, foreigners can buy property in freehold zones for full private ownership. These zones allow foreign investors to purchase both residential and commercial properties and dispose of them as they see fit. Investors can buy land or villas in Dubai and own, sell and inherit their property just like UAE nationals.

Foreigners also have access to leasehold formats - long-term leases. Such properties tend to be cheaper, and the right of ownership is limited by a fixed term, for example 99 years with the possibility of renewal. The owner also has a wide range of rights, but some aspects may need to be agreed with the freeholder.

The variety of ownership forms and the availability of freehold property, including land, make the country attractive to international investors who wish to invest in a steadily developing and regulated market.

What are the risks involved in buying property in the UAE?

Investing in property in the United Arab Emirates offers potentially lucrative opportunities, but there are risks involved. Here are some general points to consider:

• Market volatility. No country is immune to price fluctuations, although the UAE has demonstrated not only stability but also steady growth in property values in recent years. In the long term, investors will always come out ahead.
• The reliability of developers and their ability to complete projects on time. In the UAE, this issue is regulated at the legislative level. Buyers are protected from financial risks as the government oversees every stage of construction and investors' money is held in escrow accounts.

Overall, the country's property market is stable and secure, and it is important to use the services of licensed professional agents.

What are the additional costs of buying property in the UAE?

When buying, it's important to consider not only the cost of the property, but also a number of additional expenses, such as:

• Fee to the Land Department of the Emirate. This is 4% of the value of the property, plus administration fees ranging from AED 40 to AED 580 ($10 to $160).
• Agent's commission - usually 2% of the price.
• Administration fees - from AED 2,000 to AED 4,000 (550 to 1,100 $) + 5% VAT.
• Service charge. Annual community maintenance fees are charged in every community and vary according to the type and size of the property.

What do you need to know when choosing an apartment or house and proceeding with the transaction?

Simple and important steps to take include:

• Check the reputation of the developer. If you're buying apartments in off-plan development projects in Dubai, it's important to research the developer's past projects, delivery schedules and financial standing.
• Area analysis. Evaluating the infrastructure, area development plans and price dynamics will provide a clear understanding of how well the chosen option suits both living and investment purposes.
• Complex valuation. Housing costs vary not only by type or area, but also by the stage of development of the project. In order to find the best property, it's advisable to know the specifics of the market. For example, a communal swimming pool and gym are standard in the UAE, and the number of bathrooms in many residences equals or exceeds the number of bedrooms.
• Consultation with an estate agent. Professional assistance is extremely important when buying property abroad. They will advise you on the specifics of a particular area or developer, help you make an informed choice and handle all the necessary paperwork.

Can foreigners get a mortgage?

Yes, foreigners can obtain a mortgage to purchase apartments in Dubai or any other emirate, which is available to both residents and expatriates. The UAE Central Bank sets certain rules for the provision of mortgages:

• A minimum down payment of 20% is required for expatriates buying properties worth up to AED 5 million ($1.36 million). If the price of the property exceeds this amount, the minimum down payment increases to 30%.
• Additional conditions are set by certain banks. These may include a credit check, confirmation of stable income and other financial guarantees to ensure the borrower's ability to meet mortgage obligations.

How do you rent out property in the UAE?

To rent out property on a long-term basis, you must obtain a permit from the Dubai Land Department (DLD). Once permission has been granted, you can start looking for a suitable tenant, either independently or through an agency. Once a tenant has been found, a contract should be drawn up, setting out all the key terms and conditions, such as the period of the lease, the cost of the lease and the terms of maintenance of the property.

The contract must then be registered with the Real Estate Regulatory Agency (RERA), which is a mandatory requirement and helps protect the rights of both parties. For those who are not resident in the country, property management companies can be used. They will handle all aspects of letting on behalf of the owner, including marketing, screening tenants, monitoring the condition of the property, and ensuring timely payment of rent. This approach reduces personal involvement in the letting process and ensures compliance with all local legislation.

Registration with the Dubai Department of Economic Development and Tourism (DET) is required to rent out a property for short-term rental.

Why do investments in the country offer high returns?

The high return on investment (ROI) in apartments and houses is due to several factors. The Emirates attract a large number of tourists and expatriates due to its openness and cultural diversity. The country is known for its high level of security and well-developed infrastructure, making it an attractive place to live and work. In addition, a stable economy and favourable geopolitical conditions play an important role in investor confidence.

Favourable tax policies, including the absence of income and profit taxes, make property investment even more profitable. All these factors together contribute to the high return on investment.

Quote:

The company Metropolitan states that Dubai has the highest ROI indicators. The average is between 5 and 8%.

Answers to your questions

Can foreigners buy property in the UAE?

Yes, foreigners can buy property in freehold zones and leasehold in many other locations.

What is the return on investment in property in the UAE?

Exact figures depend on the type of property and the emirate. In Dubai, the average rate is 5–8% per annum.

Which properties have the highest yield?

Typically, studios or 1-bedroom apartments.

In which emirates is it most profitable to invest in property?

Dubai and Abu Dhabi are at the top of the list.

Is it possible to obtain UAE residency when buying a property?

Yes, the minimum investment and the length of the residency visa depend on the emirate.

Your comments

Vadim Bolotov

I hesitated for a long time before deciding to buy. My main concern was how I would rent out the apartment when I was not in the country permanently. But I took the risk, bought a studio and found an agency to manage my property in trust. For 1.5 years now I have been earning an income from a distance and now I am considering investing in another apartment, which is still under construction.

Vladislav Gashek

Buying in Dubai is much more profitable than in Europe. The areas are bigger and there are many new apartments on the market. I bought a studio in JVC - freshly finished, with a pool and gym in the building. In Europe, you couldn't buy a broom cupboard for the same money.