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Dubai’s real estate market is witnessing a growth trajectory like never before. The influx of new residents to the city has also resulted in a high demand for properties such as apartments.
While the city boasts stunning locations and a diverse selection of apartments for people, you must consider several factors before buying an apartment in Dubai. This article will provide an outline of the ten factors to consider when buying an apartment in Dubai. It will also address common mistakes that are made in the process so that you can avoid them.
An important factor to consider before buying an apartment is to have your long-term goals laid out.
How long will you be in Dubai? Will you reside in the apartment or lease it out? Do you want to live in one location or have the flexibility to move around?
Having clarity on these questions will help you invest in the right apartment for yourself. If you are unsure of your long-term plans, renting an apartment might be a better option.
It is important to ensure you do not buy an apartment that is too expensive for your budget.
A globally accepted way to determine affordability is finding out if your monthly housing expenses are below or above 30% of your earnings. If, the cost of your property is less than 30% of your take-home pay, then this is generally considered affordable, but this will depend on how much you plan to spend on other expenses.
Other factors to consider before buying an apartment in Dubai are the upfront and additional costs of buying a property - the upfront costs may amount to around 7 to 8% percent of your purchase price. This does not include other ongoing fees such as maintenance.
Here is a brief overview of upfront expenses you may generally incur while buying an apartment in Dubai:
Dubai Land Department (DLD) fees - 4% of the property price
Administration fees - AED 580
Property registration fees -
AED 2,000 & 5% VAT (for properties valued below AED 500,000)
AED 4,000 & 5% VAT (for properties valued above AED 500,000)
Real estate agent fees - 2% of the property price % 5% VAT
Bank mortgage arrangement fees (if applicable) - 1% of the loan amount & 5% VAT
DLD mortgage registration fee - 0.25% of the loan amount & AED 290
Property valuation fee - about AED 2,500 + 5% VAT
Therefore, it is wise to set a budget before going apartment-hunting.
Location is an important factor for buying an apartment, as it can determine the apartment price and your proximity to important hubs.
Whether you want to be near hospitals, schools, and your office or be in the suburbs, it is important to determine the residential area best suited to you.
Some areas like Jumeirah Village Circle, Dubai Marina, Business Bay and Jumeirah Lake Towers, are considered popular locations for people looking to settle in Dubai.
Your property size is also a factor to consider before buying an apartment because it could be closely linked to your long-term goals.
For example, if you are planning to start a family soon, it would probably be a better option to buy a two bedroom apartment instead of a one bedroom.
Whereas if you are a single or couple who are looking for a budget friendly option and don't need much space, you could look for a studio or one-bedroom apartment.
By establishing your requirements, this will help you to set an appropriate budget, choose communities and reduce your apartment searching time.
As an apartment owner in Dubai, you are likely to incur various maintenance fees. One of the most common maintenance fees is a service charge - which covers the costs of managing the building you live in, such as repairs, security, cleaning, etc.
If you plan to hire personal help, that is a factor to consider when buying an apartment as well. Ensure to take this cost into consideration.
In Dubai's thriving real estate market, there are a large number of property developers who build apartment developments.
It is important to carry out your due diligence and research on the developer whose properties you are interested in. Read up about their past projects, any issues that may have ensued, the thoughts of people who already reside in that property, etc. This is one of the most important factors for buying an apartment.
If you are looking to buy apartment as an investment, you should evaluate the likely return that you could expect to receive.
In Dubai's thriving real estate market, most properties have the potential for high capital appreciation. But, it is still a good idea to consult an experienced real estate professional to identify excellent opportunities to generate a strong return.
If you plan to lease your apartment, consider the potential rental income that you could expect and compare this to the costs that you will incur to understand what your return is likely to be.
One of the deciding factors for buying an apartment in Dubai is whether to opt for a completed property or an off-plan project.
An off-plan property is a property/project in Dubai that is still under construction or in the early planning phase. There are a number of potential benefits of buying off-plan.
Buyers generally purchase an off-plan property at lower rates than a completed property and can therefore typically expect capital appreciation once the property is completed by the developer.
Therefore, if you are buying the apartment as an investment, you could consider an off-plan property. But, if you are looking for a property that you can move into right away, or you want to start generating a rental income immediately, you should look for a ready apartment.
The title deed is the most important document of any property purchase in Dubai as it proves a person’s ownership of a particular property.
Completing the legal procedures properly and obtaining your title deed must be in your checklist while buying an apartment in Dubai. Before the actual property transfer occurs, all the relevant permissions must be obtained from the DLD.
This is also an important factor for buying an apartment in Dubai - obtaining the right home insurance. As there are various home insurance providers, it is important to compare their policies and select one that best suits your lifestyle, income, and other circumstances.
You can research the company online, ask people you know for reviews, and also consider factors such as deductibles, sum insured, special considerations, etc.
Often, first-time apartment buyers in Dubai make mistakes that may seem insignificant at first but pose consequences later.
Here are some common mistakes to avoid when buying an apartment in Dubai.
As mentioned above, your expenses will be one of the most important factors for buying an apartment in Dubai.
From upfront costs and additional costs to ongoing maintenance - it is important to plan ahead and outline all expected costs to determine whether you can afford to buy the apartment.
Failing to budget for all potential costs may lead to sudden expenses arising for which you may not be prepared.
An important question you are probably asking yourself is, “When to buy an apartment?”.
Determining the right timing and planning is crucial before purchasing an apartment in Dubai.
Your finances, future plans, and family plans will have a big impact on the apartment type, location, size, and budget that you should go for.
If you buy an apartment without planning, it may lead to you buying an apartment that is not best suited to you, leading to potential difficulties in the future.
It is always advised to do your research on the Dubai property market before buying an apartment. If you do not have enough information, you can approach a RERA-accredited real estate agent who can guide you through everything that you need to know.
Once you have all the information, always pursue an apartment you are absolutely sure of. If there are certain factors in a property you are hesitant about or you have any doubts, continue looking until you find the right apartment for you.
Planning for the future is also an important factor when you ask yourself, “When to buy an apartment?”
If you want to invest in an apartment, keep abreast with market trends to ensure that you are making a wise investment. If you wish to stay in Dubai, plan for an apartment that will house you and your family comfortably.
Not looking at the bigger picture may bring about problems in the future and catch you off guard.
There are a huge range of options in Dubai when it comes to buying an apartment. Keep your options open and avoid limiting yourself to a very narrow search criteria without first exploring all of the possibilities that are available to you.
Many homebuyers consult with a real estate agent before proceeding to buy an apartment. You can do the same with Engel & Völkers for a smooth and hassle-free apartment-buying experience in Dubai.
You can also stay up-to-date with the latest real estate news and updates from Engel & Völkers Dubai. Get in touch with us at dubai@engelvoelkers.com or call us at 800 355.
Explore our exceptional selection of apartments for sale in Dubai
Frequently asked questions
Purchasing an apartment in Dubai is generally considered affordable. Whilst there are prime areas of Dubai that are very expensive, there are also communities and property types that are budget-friendly and would be considered affordable compared to properties in other major global cities.
Dubai also has an efficient mortgage market and off-plan property developers offer a range of flexible payment plans, giving buyers a variety of payment options to ensure an affordable property purchase.
When buying an apartment in Dubai, research affordable communities and consider your requirements carefully. By compromising on factors like having a sea view, you will have a better chance of finding a property that is affordable to you.
Considering the factors for buying an apartment in Dubai, there are numerous potential benefits:
A strong and thriving economy that provides stability for homeowners
High rental yields and capital appreciation
High demand from tenants
High quality of life in the city
A regulated real estate market
No property tax, capital gains tax or income tax
Strategic global location
World-class infrastructure
Simply put, yes. There are different steps for a foreigner buying an apartment in Dubai, but it is a highly streamlined process that can be carried out with the help of a real estate agent.
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Contact
Engel & Völkers Dubai
Golden Mile Galleria 2, Office 21, Mezzanine Floor
Palm Jumeirah, PO Box 17722, Dubai, UAE
Tel: +971 4 4223500