A Comprehensive Guide to Buy Your  First Property in Dubai

As a popular cosmopolitan city, Dubai has attracted tens of thousands of people from all over the world to invest in it during the past decade. Owning real estate property and investing in it has become a much simpler process due to the regulations set out by the government and the promised prosperous future of real estate projects in Dubai. Expats are finding it safe, easy, and straightforward to invest in properties in Dubai because of the vast number of options, range of prices, and skilled developers.

Living in Dubai is dreamlike as it offers a luxurious lifestyle for those residing in it. With fancy private beach access, parks, modern shopping malls, premium dining restaurants, designer shops, entertainment facilities, and universally acknowledged projects, who  would not want to be living in Dubai?

The process of buying real estate for the first time in Dubai might seem overwhelming and challenging for most first-time buyers. This is why a lot of first-time buyers in Dubai make real estate blunders which cause them to lose a lot of money. So, if you are investing in real estate for the first time in Dubai, make sure to follow through with our comprehensive guide to help you make all the right decisions while purchasing your property. This guide will lead you through the process from A to Z, so you can have a smooth investment process without losing a penny!

Before we get into our steps, the most critical thing you need to do is have a good real estate agent to guide you through the process and answer all of your questions and handle any hurdles you could face.

The following is everything you need to know and consider when purchasing your first real estate property in Dubai:

First: What Is Your Purpose for the Real Estate

Before you start searching for a property to purchase, talk to your real estate agent about your reason for buying the property. You could be buying it for investment purposes or to live in it alone or with your family. You will mostly find that it differs in lifestyle, size, location, planned properties, or ready properties. But, what is the difference between off-plan and ready-to-move-in properties? Here is what you need to know:

Off-plan Properties in Dubai

Off-plan property is a project under construction, and it is more affordable than ready properties. However, this type of property is most suitable for people who are looking for long-term investment in real estate as you will be buying it for a catchy price and its value will increase as soon as the construction of the project is complete. If you are ready to move to another house immediately with your family, then you might want to consider a faster option i.e., ready-to-move-in properties.

Invest in Ready-to-Move-in Properties

This type of real estate property is perfect if you are ready to live in it or you are looking to start renting it as soon as possible. While this is convenient for people who are not looking for long-term real estate investment options, it might be limiting when you are short on time. If you have time on your hands and you are willing to wait and have a higher quality property or a better location, then we advise you to go for an off-plan property.

Second: What Type of Property are You Interested In?

 When you are looking to invest in real estate in Dubai, you need to consider three types of properties: Commonhold Properties, Freehold Properties, and Usufruct Properties. Here is what you need to know about each type:

Commonhold Properties

Properties under this category usually include freehold apartments. This means that, unlike leasehold properties, there is no time limit to your owning this apartment. The owner of a commonhold property is allowed to sell, rent, and pass the property through inheritance. You can find this type of property in all areas specified for investment. This includes areas like Downtown Dubai, Dubai Creek Harbour, Dubai Marina, Palm Jumeirah, Business Bay, Jumeirah Village Circle, and Jumeirah Lake Towers.  

Freehold Properties

This type of property allows the owner to attain complete ownership over the property and the land it is built on. Keep in mind that you can only buy freehold properties in Dubai through a real estate developer who is approved by the UAE government. In addition, freehold properties mean that you are responsible for maintaining and keeping the property in good condition, which means you will need a higher budget for such a property investment.

Usufruct Properties

This type of property is open for investors to lease for a longer term. This means the investor gets to lease the real estate property for between 10 and 100 years. As an investor, you are allowed to do anything with the property except destroy it. Article 1333 of the Civil Code defines Usufruct as a “property right in favor of the usufructuary to use the property of another and to exploit it provided that it remains in its original condition.”

Third: Set Your Budget for the Investment

Now that you have set your purpose for buying the property and the type of property you would like to invest in, it is time to start setting your priorities, talking to a real estate agent, and most importantly, setting your budget. Setting a budget and organizing your financing should always be at the top of your list when you are investing in real estate in Dubai.

Some of the things you need to consider when you are setting a budget include:

1.       Your monthly income

2.       Your spending habits and capacity

3.       Your savings

4.       Your loan options

5.       28% rule

When you are investing in property, you need to make sure you have the assets to successfully get a cashflow once you completely own the property. For example, if you are looking to invest in a studio, explore the costs in different areas, compare them, and choose the area that best fits your budget. This will give you a start on how much money you have to put aside for the investment.

You also need to make a clear outline of your resources to financially assist your real estate investment project. Although real estate prices in Dubai are affordable compared to other major cities in the world, you might need to get help from resources such as a loan from a private lender or a mortgage from a bank. However, if you are planning to apply for a mortgage from a bank, make sure you have a high credit score to raise your chances of getting approved. Otherwise, your lending bank will most probably turn down your application.

What Is the 28% Rule?

This is a rule that determines how much money you should be spending on a monthly mortgage payment. In simple terms, it recommends that you do not spend more than 28% of your gross monthly income. However, this rule does not apply to every property investor as some sources recommend up to 31% of their gross income be paid for the mortgage. Consult with your real estate agent and your bank to help you determine which option is better for your financial situation.

Four: Choose which Area You Would Like to Invest In

This is the determining step in your purchase process. You will be able to decide on which area you want to invest in real estate in by setting your goals for the property. If you intend to live in the property you are buying, then you would want to choose a top-notch Dubai neighborhood. Dubai’s top neighborhoods offer luxurious and quiet lifestyles, well-facilitated and the facilities are within walking distance, are connected to transportation, have good schools and daycares, offer prime dining restaurants, and more. However, most of these things are determined by your budget and how much you are able to spend on this investment.

If you are buying the property as an investment, you need to choose a good real estate developer and talk to a real estate agent so both of them can help you with the property’s ROI (return on investment) rate. The area in which you want to invest in should have future potential with a strong tourism rate and high rental yields. Areas like Dubai Marina, Downtown, and Palm Jumeirah are perfect for the purpose of investing in real estate.

However, one critical piece of information you need to be aware of is that if you are an expat living or investing in Dubai, you are only allowed to own freehold properties. This is why you need to first do research on freehold areas, then begin your property search.

Choose the Right Community and Neighborhood for your Investment

Each community in Dubai has its own unique features, projects, and facilities. Each neighborhood houses a community of people who share a similar lifestyle aspirations and needs. For example, if you are interested in a grandeur lifestyle, you might want to consider areas like Dubai Marina, Downtown, Palm Jumeirah, Business Bay, and Jumeirah Lakes Towers. These areas are also perfect if you are looking to rent your property or use it for Airbnb users to make a high extra income and have a quick cashflow after you purchase the property.

On the other hand, if you are looking for lower-cost areas and family-friendly neighborhoods, then you could consider areas like Emirates Hills, Al Barari, Jumeirah, Arabian Ranches, and Midrif. These neighborhoods usually have low-rise buildings, schools, daycare options, and shopping malls, making them perfect for your family to live in!

Five: Make a List of the Features You Are Looking for

Now that you have set out your purpose, budget, and area, you need to decide what kind of property you would like to invest in. Real estate investment ranges from apartments, studios, townhouses, penthouses, duplexes, villas, and houses for sale. Your choice will greatly depend on your budget, needs, and goal for buying the property.

Each property in Dubai has its unique features that you should look out for. Some of these include the layout, design, architecture, area, space, and amenities provided. This is why you need to make a checklist of the main features you are looking for in a property. In addition, do not forget that you should also include the number of bedrooms, bathrooms, availability of a balcony or terrace, patio, view, grass areas, and beach access. Having a clear vision of what you want your property to have and look like will make it easier for you to invest in a property and will help your communication process with your real estate agent as they will be able to show you all the properties that match your criteria.

If the property you are buying is for personal reasons, make sure you can find the essential services around you, including schools, shopping malls, public transportation, water bodies, parks, gyms, restaurants, resorts, and more.

Six: Find a Reputed Real Estate Developer and Agent

One of the most important steps in real estate investment is choosing a reputed developer. A developer is what will help you cut costs on maintenance and keep the property in good condition and shape. Fides Properties will have you covered on this bit. A real estate agent who has profound experience in the field is important to guide you through any troubles you might come across, especially if you are a first-time home buyer. Work with an agent who has a good record of selling properties in the area you chose because they will know everything and probably have connections that will grant you the ideal house with the best deal!

In addition to tracking the real estate agent’s record, make sure to track your developer’s record as well. A good real estate developer will have previous projects with high-quality structures, projects completed on time, and common areas that are well-kept.

Bottom Line

Real estate investment in Dubai could seem overwhelming and scary for first-time buyers. However, with the right information provided and the right developer and agent by your side, you have nothing to worry about! Go through our six-steps guide, follow it, and rest assured that your first property investment process will be a good and easy one!