The real estate finance in Dubai is currently witnessing an important rebound showing strong signs of sustained growth. Dubai is for many the place of choice to buy a house as the property sector offers a wide portfolio from beachfront villas, to luxurious penthouses and apartments and townhouses. Whether you are a resident or foreigner, Dubai real estate market is open to all with no restrictions to owning a house.
All property experts insist this is the best time to buy a house in Dubai as property value will steadily appreciate by 2023-24. As for the cost of buying a house in Dubai, it remains one of the most interesting since property prices in Dubai are unbeatable compared to other cities across the world, hence the massive inflow of foreign buyers to the Emirate.
Cost of a property in Dubai
The average house price climbed to AED 1,235 per square foot in October 2021 from AED 1,021 per square foot recorded in January the same year, according to a report from global consultancy Knight Frank. However, home prices vary depending on their location.
The demand for villas and townhouses is on the rise in the UAE. Villa sales grew by 20% in September as per ValuStart report, with 22 property transactions registered with the total value of AED 30,000,000. Indeed, as a reaction to the 2020 lockdown, people are now looking to expand their residential areas, with outdoor space and gardens. Regarding new apartments, the demand for this type of property is also significant.
For instance, the average price of an apartment at Remraam residential community by Dubai Properties starts at AED 700,000. Located in Dubailand area, Reemram offers a choice of luxurious 2 and 2+ bedroom apartments, where you can live amidst nature yet enjoying all modern day lifestyle facilities.
Starting from AED 1,150,000 you can get to live a vibrant fulfilling lifestyle in one of Mudon Views’ 1-, 2- or 3-bedroom units or in a 2-storey duplex. Guaranteeing an active lifestyle thanks to the beautiful outdoor spaces it features, Mudon Views is the perfect place to buy a house in Dubai.
La Violeta at Villanova is the latest residential development launched by Dubai Properties. This impressive upscale off-plan project in Dubailand (completion scheduled in 2025), features 3- & 4-bedroom townhouses + Maid unit, starting at AED 1.45M. With its optimized floor plans and elegant interior design, this is the place where family life is set to bloom for generations to come.
Purchase a ready to move-in house or an off-plan property?
In Dubai, both ready-made and off-plan properties are favored by buyers, but they equally have advantages and disadvantages.
In a ready to move in property, you get to see physically and check every detail and finishing of the residence you intend to buy, so there are no bad surprises awaiting you when moving in! If your purchase is for pure investment, you can put the property directly on the rent market with immediate rental income. Of course, when market prices spike, you can generate higher returns with a completed property. But buying a ready-made house also implies some inconveniencies. To begin with, not only the price is generally higher than that of an under-construction property, but the down payment is significant as well, as it accounts for 25% of the cost. Another important downside is that ready properties are generally pre-owned properties and might need some repairs or enhancement, which can add up to their already high cost.
Buying off-plan or under construction properties directly from the developer or sometimes a first owner, can be a cost-effective investment. The biggest perk is that you are buying a brand-new residence at a price 10-20% cheaper than that of a ready property. Another benefit is the lower upfront costs you pay as some developers require a small down payment. Generally, the closer to completion, the higher the price becomes. But off-plan projects purchase has also its risks, the most common issue being the delay in the completion of the project or a potential change in the market condition.
Extra costs
When it comes to buying a home, it is important to understand all the costs involved. Remember that the purchase price that you negotiate is the starting point, not the final amount.
In Dubai, all purchases must be registered with the Dubai Land Department within 60 days of the transaction, otherwise, the purchase will be void.
DLD charges: 4% of the sale price.
Registration fees: AED 2,000 + 5% VAT for properties estimated at less than AED 500,000 and AED 4,000 + 5% VAT for properties estimated above AED 500,000.
Agency fees: Engaging the services of a real estate agent implies paying 2% fees of the purchase price to which you must add 5% VAT.
Conveyance fees: Should you appoint a licensed conveyancer that ensure that all documentation, contracts and financial arrangements associated with the transaction are legally in order, you must pay between AED 6,000 to AED 10,000.
Initial deposit: It can start at 10% of the purchase price and must be collected a RERA registered broker who holds the deposit amount until the property is handed over to the buyer.
Insurance fees: Count AED 1,000 for a home insurance. Although house and contents insurance is not mandatory, it is nevertheless highly recommended to subscribe to an insurance policy as it offers protection from potential loss or damage due to theft, accidents, fires or natural disasters.
Service fees: Annual maintenance charges on a property are payable to the Dubai Land Department based on the RERA Service Charge and Maintenance Index and may vary according to each community. This amount is used for the upkeep of common areas of a building or community.
In all cases, as a buyer you should try to pay as much in cash as possible for a property, thus, limiting the mortgage value to as little as you can afford. Ideally, the monthly mortgage payment should not exceed 20 per cent of your total household income.
Most importantly, always check the developer track record, reputation, and credibility in terms of punctuality and quality, before venturing in any purchase.