Buying real estate dubai

Buying Real Estate in Dubai – What do I need to know to be 100% ready?

Introduction

Buying Real Estate in Dubai is a big unknown to most investors. Dubai is a city made to impress: man-made islands, highest building in the world (Burj Khalifa), tallest world hotel, 7 stars hotels (Burj Al Arabs). It real estate sector has been pursued for worldwide investors for 20+ years.

Investors often approach us with inquiries such as: (a) what are the costs involved in a property transfer; (b) where can I buy? (c) how much real estate is worth in Dubai? (d) they also ask us to revise terms of the transfer. What are the forms I need to be aware of?

This publication will address these questions to enable investors interested in acquiring real estate to be knowledgeable of the basic information discussed at any real estate transfer in Dubai.

Where can foreign investors buy real estate in Dubai?

Pursuant to Law No. 7 of 2006 regulating property registration in the Emirate of Dubai and Regulation No. 3 of 2006 specifying the areas where foreigners may own property in the emirate of Dubai, foreigners can buy and own property located in designated areas.

These designated areas are key locations: Dubai Marina, JLT, Business Bay, Dubai Downtown, The Palm, Dubai Hills, The World, Dubai Waterfront, Arabian Ranches.

What perhaps could be of attraction to foreigners and is kept off record is the old parts of the city and the beach borderline and areas of Jumeirah and Al Wasl.

 

Buying real estate dubai
Freehold areas – Buying real estate Dubai

 

How much is real estate worth in Dubai?

Real estate goes through ups and downs, the system is wavy but this tends to be welcome by savy investors who know when to buy and sell with gross margins, specially when purchasing off plan properties and selling near completion.

To play with the geographical areas above we do invite you to check data in Dubizzle  or Property Finder,  both leading real estate search engines.

What are the costs involved in a property tranfer?

The buying of real estate in Dubai involve the following Fees:

Seller: 2% of the sale price  (in practice buyers do cover this 2% fee)
Buyer: 2% of the sale price
AED 250 as Title Deed issuance fees
AED 100 Land Map Fees for lands that are not subject to the authority of Dubai Municipality
AED 325 Land Map Fees for the unified map with Dubai Municipality
AED 250 for Villas & Units Map Issuance Fees
AED 10 Knowledge fees added to each fee
AED 10 Innovation fees added to each fee

In addition to the above, buyers will need to bear the following Registration Trustee Fees (based on the actual value of the property/ies being purchased):

If the sale price exceeds or equals AED 500,000 AED 4,000 will be charged + VAT on Service Partners fees
If the sale price less than AED 500,000 AED 2,000 will be charged + VAT on Service Partners fees.

A trustee fee is applicable as transactions do take place in trustee offices electronically connected to the Dubai Land Department system allowing for an easy flow of transfers on daily basis without processing delays.

It is also important to note that when buyers are companies, they will need to be registered with the Dubai land department. It can be done at the time of the purchase. The Fee involved in the registration is AED 2,000 if it is a UAE entity or AED 4,000 if it is a foreign entity.

What documents will the investor need to prepare?

Individual will need to prepare the following documents:

  • ID – Emirates ID or Passport
  • Non Objection Certificate (“NOC”) from Developer. The NOC is issued when the Developer confirms that there are not pending payments due on the Property/ies (i.e. service charges). It is worth inquiring in advance for the processing time as it varies greatly from developer to developer, from 24 hours to 15 days.
  • Power of Attorney – in the event that the purchaser delegates in a third party the power to appear on the date of transfer.

Companies will need to prepare:

  • Non Objection Certificate (“NOC”) from Developer. The NOC is issued when the Developer confirms that there are not pending payments due on the Property/ies (i.e. service charges). It is worth inquiring in advance for the processing time as it varies greatly from developer to developer, from 24 hours to 15 days.
  • Power of Attorney – in the event that the purchaser delegates in a third party the power to appear on the date of transfer.
  • License duly translated into Arabic.
  • Companies documents evidencing that the signatory has power to buy real estate property. This would need to be assessed on case by case basis based on where it is set up, whether changes have been made to the decision making bodies, etc.
  • Certificate of Incumbency.
  • Undertaking letter undertaking to report a change in ownership of the Company

What documents will investors need to sign to undertake the purchase of real estate in Dubai?

There are two main documents that most buyers will sign when buying real estate in Dubai:

Form B – Agreement with Real Estate Agent

In this contract the investor will agree the terms of the agent’s engagement along with its commission with its generally fixed at 2%.

This form, as with the next forms we will see below is processed online. The agent will fill all the details and the investor will need to revise to ensure all is correct before confirming and accepting the terms online. The investor will receive the link and email directly from the Dubai Land Department.

Form F – Contract of Sale

In this contract the buyer investor and seller will agree on the terms of the transfer: date, price along with any special conditions that affect the purchase.

At this time is very important to understand the time requirements for buyer (specially when buying through a mortgage) and for seller (NOC processing, for example) to ensure that the agreed time is sufficient to undertake the transfer without hurdles.

As an additional note on these forms is that they are issued by the Dubai Land Department RERA – Real Estate Regulatory Authority, which is the DLD’s regulatory arm that aims to protect real estate transactions via transparency and standardization.

When offered forms other than these electronic forms it is very important that you ensure that the terms do not contradict each other as the online forms will have prevalence over any prior or subsequent non-registered documents.

 

I am confident that with the above information you will be ready to enjoy the process of becoming a Dubai property owner. It is always recommended to do it next to experienced counsel specially if it is your first transaction or you cannot be present during the acquisition. A practical due diligence (title deed and ownership verification that can be done in minutes!) before committing is highly recommended.

For more information published in English  you can visit all our publications in this link as well as the videos in Englishof our Managing Partner Maria Rubert.