Dubai has a stunning skyline, diverse culture and luxury living conditions, and has always attracted property buyers worldwide. This live city offers a successful property market with many options from luxurious skyscrapers to affordable suburban homes.
The global city real estate market is on the rise. The figures show a fantastic story of rising housing prices, strong rental yields and many investors making it highly competitive and profitable. However, when it comes to purchasing apartments for sale in Dubai, one needs to make careful considerations, especially for first-time buyers. We have put together a guide to help you through all this necessary information.
Important considerations:
- Can you afford the apartment?
To be considered affordable, your housing costs per month should not go beyond 30% of your income. This is a rule of thumb that applies all around the world. Upfront costs should also be included in your budget; they typically amount to around 20 – 25% minimum including DLD. In addition to the yearly service cost, you, as owner, will also be responsible for paying any service charges that may arise.
- What about the initial cost?
| Particulars | Costs |
|---|---|
| Fees for Dubai Land Department (DLD) | 4% of purchase price + AED 580 (INR 13120) administrative charge |
| Property Registration Fee | AED 2,000 (INR 45,200) + 5% VAT for properties under AED 500,000 (INR 1.1 Cr) in value For properties above 500,000 AED (INR 1.1 Cr), the price is AED 4,000 (INR 90,400) + 5% VAT. |
| Real Estate Agent Fees | 5% VAT + 2% of the property price |
| Fees for Bank Mortgage Arrangement | 1% of the loan amount plus 5% VAT |
| DLD Mortgage Registration Fees | AED 290 (INR 6500) plus 0.25% of the loan amount |
| Property Assessment Charges for mortgage | AED 2,500–3,500 (INR 56,000 – 80,000) + 5% VAT |
- How can you arrange for the finances?
When thinking about purchasing an apartment , your down payment should be one of your top priorities. The necessary minimum deposit for foreigners buying an apartment for less than AED 5 million (INR 11.2 Cr) is 25% of the purchase price. In comparison, for citizens, it is 20%, as per UAE Central Bank regulations. Your down payment must be funded entirely from your funds and cannot be taken out as a personal loan from a local bank. However, a personal loan might cover the upfront transaction charges, agency fees, and bank fees.
- What will be the rental yield?
In the long run, you should consider if the expected rental income will be enough to meet your monthly mortgage payments and maintenance costs if you decide to turn your apartment into an investment property. Here are the average rental yield of some of the affordable popular locations in Dubai, according to Bayut’s Q3 2023 Market Report:
- Can you get an investor’s visa?
If you own property or group of properties then you can be granted a Golden visa for a period of 5 years. It can be renewed on the same conditions without a sponsor subject to:
- Provision of letter from the land department of the respective Emirati stating that you own one or more properties whose value is not less than 2 million dirhams (INR 45.3 Cr).
- Purchase of property with a loan from the bank which is approved by the local entity.
- Is the Apartment Close to a Metro, Mall, Park, or Community Area?
Take into account your lifestyle, stage of life, and family size. Is there a daycare centre or school close to the property? How long does it take you to go to work or your kids’ school each day from the property? Is access to the metro or public transportation easy? Do you find dining establishments, coffee shops, tourist sites, or places with a vibrant nightlife important? Are there enough possibilities in the community you’ve chosen?
- What is the size of the apartment?
Again, think about how many people will be living on the property; is it big enough to accommodate everyone? Do you have any immediate intentions to grow your family? Are you trying to find your kids a garden balcony? Studio and one-bedroom flats might sometimes be the same size. A few of the apartments have balconies while others don’t. In Dubai, the typical apartment size is:
- Studio: 330 to 700 sq ft
- 1 BHK: 750 and 1300 sqft
- 2 BHK: 1350 – 2000 sqft
- 3 BHK: 2200 – 6000 sqft
Penthouses, located on the very top levels of skyscrapers, are another option. Luxury penthouse apartments sometimes include floor-to-ceiling windows that look out over the city or the countryside. Considering that penthouses are technically constructed close to roofs, they often feature roomy interiors with plenty of windows. Generally speaking, they are bigger than standard apartments. Typically, penthouses have large floor layouts and may reach up to 5000 sq ft or more.
- What is the layout of the apartment?
Since not every square footage is created equal, it is crucial to accurately check the 3D floor plans and layout. Do you want to live in an open-plan space? Are you looking for huge living spaces or larger bedrooms?
- Have you considered building age or construction quality?
Did you take the building’s age into consideration? If buying off-plan, did a reliable developer build the property in question? Is the property in need of any modifications if you decide to invest in the secondary market?
Conclusion
When you become a homeowner, you arе rеaching a significant milеstonе that demands you to consider more than just your down paymеnt. When contemplating an investment in thе property sеctor, it is еssеntial to еvaluatе your future commitmеnt to Dubai, compare the expenses of renting vs purchasing, take into account any and all hidden fees and taxes, and bе surе to do thorough rеsеarch.