General questions
Freehold vs Leasehold in the UAE
The opportunity for foreigners to purchase property in Dubai opened up in 2002. Since then, it has attracted many expats and overseas buyers looking to take advantage of secure regional investment. Therefore, advice about how to buy a house was needed..
The number of units available to foreigners looking to buy property in Dubai has grown significantly over time, with an abundance of apartments, villas, and townhouses currently on the market..
Freehold - Overseas investors and non-UAE national expat residents are able to purchase property in freehold areas, which are spread out across the emirate..
Leasehold - There are also several leasehold areas alongside the freehold regions that expats can invest in. The term "leasehold" essentially gives one 99-year ownership of the house, with the land owned partially by you and partially by the freeholder who has leased the property to you.
Off-plan vs Secondary Properties in UAE
When you just start your search for a new property in Dubai, you’ll likely be asked if you are looking for off-plan, primary or secondary properties. In fact, this is one of the most crucial decisions you need to make when property hunting.
This may be a problem if you’re not quite sure what the difference is or why it matters. That is where this article comes in!
We will break down all these terms and highlight the advantages and disadvantages of primary and secondary properties so that you can make a more informed decision.
What is a Primary Property?
As the name suggests, primary properties are new properties built by a developer. You can either buy a primary property directly from the developer’s sales team or through a broker.
Buying a primary property means that it had no previous owners, and you will be the first to purchase it from the developer. Primary properties can either be ‘Off-plan’ or ‘Ready’.
However, you should note that not all off-plan properties are “Primary”. That is because some people buy off-plan properties from developers, and resell the unit before completion. Meaning, that the property is “Secondary”, since you’re not buying from the developer, yet still off-plan.
What is an Off-plan Property?
An ‘Off-plan’ property in Dubai is a property that is still under construction. This term includes properties that are in the early planning or construction phases. Off-plan real estate can be a great investment option as it offers many benefits, including attractive prices and the opportunity to secure property in prime locations before they are fully developed.
Typically, buyers who invest in off-plan can expect significant value appreciation once the property is completed, making it a popular choice in Dubai’s dynamic real estate market. Meanwhile, a ‘Ready’ property, is one that is fully constructed.
To summarise, here is the meaning of ‘Ready’ and ‘Off-plan’ properties in the Dubai real estate market:
❗️Off-plan Property: The property is still under construction, and the developer commits to deliver it by a set date.
❕Ready Property: Construction for the property is complete, and it is ready to be moved in immediately.
What is a Secondary Property?
In contrast, a secondary property is one that is previously owned, and the owner (not the developer) is looking to sell it for profit.
In short, secondary properties are those that are presently rented out or occupied by the owner and are already on the market for rental or sub-sale purposes.
Moreover, these kinds of homes are typically located in established neighbourhoods. However, occasionally an owner of an off-plan property may choose to sell it; hence some secondary properties can be off-plan in communities that have yet to mature.
Which Is Better: Off-plan Vs Secondary Properties?
Pros:
✓ Latest Designs
Buying a new primary property means you’ll be getting the most cutting-edge designs and amenities. However, beyond the aesthetics, there are many financial advantages to looking into the primary market.
✓ Lower Market Price
One of the main benefits of buying primary off-plan properties is that their price can be significantly lower than the market price. That is because developers often offer discounts and deals that allow you to get much more value for the money.
✓ Developer Promotions & Flexible Payment Plans
Some developers offer to cover some legal costs, such as the 4% Dubai Land Department fee, making it even more fiscally attractive. Moreover, many developers offer flexible payment plans.
✓ Higher Return on Investment
The above factors lead primary off-plan properties to have a healthy capital appreciation (a rise in the unit’s market value) even before construction is complete.
Essentially, taking advantage of these financial incentives means you can purchase a primary property at a lower price and sell at a much higher price for a significant profit. Hence, primary and off-plan properties in Dubai are attractive investments.
✓ Low or No Refurbishment Cost
Another obvious advantage of primary properties is that because the units are brand new, you will likely spend very little money on refurbishments.
Cons:
✗ Limited Supply
Currently, the demand for primary properties outstrips the supply. Accordingly, primary units sell out within a matter of days after developers put them on the market. That is why one of the challenges when trying to find primary units is acting fast enough.
✗ Possibility of Project Abandonment
There is a slight risk if you buy an off-plan property, as developers may abandon the project in case they run into financial difficulties. However, the authorities set strict regulations to protect anyone who buys off-plan properties in Dubai.
For example, the Dubai Land Department (DLD) and Real Estate Regulatory Agency (RERA) demand developers deposit 20% of the project’s cost into an escrow account. This is just one of the safeguards in place to ensure developers have enough funds to complete the development.
✗ Delivery Might Not Meet Expectations
Particularly with off-plan primary units, you won’t know exactly what it will look like until construction is complete. Hence, you run the risk of reality falling short of the 3D models shown by the developer.
That is why it is critical to only purchase from well-established developers that have an excellent track record of delivering high-quality projects on time.
Secondary Properties:
Pros:
✓ Established Unit and Location
Secondary properties are often ‘Ready’ properties and are located in established neighbourhoods. Accordingly, you will have a better idea of what it would be like to live there, from the maintenance to the amenities and even your neighbours.
✓ Wider Choice of Options
As we mentioned before, the primary market is extremely fast-paced. This means that primary properties sell out very quickly; accordingly, they are much harder to come by compared to secondary properties.
Therefore the benefit of looking into the secondary market is that you may have a wider choice of options, and you’ll have a bit more time to make your decision.
✓ Negotiable & Lower Price
Lastly, despite not having access to developer promos, secondary properties can occasionally be more affordable than brand-new units. Moreover, with the help of a competent real estate agent, you can negotiate the price down so that you get great value for your money.
Cons:
✗ Renovation Costs
On the other hand, a downside of purchasing a previously lived-in or leased property is that you may need to carry out renovations. The extent of the refurbishing you’ll need to do will depend on how old the unit is and how well its previous owners maintained it.
Generally, if the unit is more than 10 years old, we advise that you factor a reasonable amount of money into your budget for any repairs and renovations.
✗ Older design
Moreover, depending on how long the property has been on the market, you may not get the most modern and cutting-edge designs.
✗ Less flexible payment plans
In the secondary market, you won’t have access to the same flexible payment plans that developers offer.
Types Of Residential Real Estate Available in Dubai
There are 3 main property types found in Dubai. These include apartments, townhouses, and villas.
Apartments & Penthouses – Generally ranging from Studios to 4 Bedroom options found in low, mid, and often high-rise apartment buildings. Apartment buildings tend to be located all over Dubai and especially in densely populated communities popular with expats.
Townhouses – Townhouses are terrace-type homes. They are multi-story (usually two) and share at least one and sometimes two exterior walls with an adjacent property. Bedroom options usually range between 3 and 5 beds and all options come with private gardens.
Villas – Whilst they do come in different shapes and sizes villas are the largest property type found in Dubai. They are standalone properties meaning they are completely separate from any other buildings. Just like they tend to be larger in size the land they sit on also tends to be significantly bigger when compared to townhouses. Bedroom options for this property type range from 3 and can go as high as 10 or more.
Who can buy Property in The United Arab Emirates
The short and simple answer to this question is – Everyone.
Dubai is a truly global city that’s open for business in every way including real estate. This means that whether you are a citizen, expat, or even a tourist you have the ability to purchase property in Dubai. There are no restrictions of any kind and the best part is that the fees for doing so are the same for all buyers regardless of status.
Cost of Owning a Property in The UAE
The cost of owning a property in Dubai will depend on the type of property. As most properties are built within apartment buildings or villa communities there are ongoing costs that do apply. These are often referred to as “Service or Maintenance” fees and are paid towards the upkeep and maintenance of the building or community the property is located in.
Generally speaking, apartment buildings are more costly to maintain, and therefore apartments tend to have higher “Maintenance” fees as opposed to villas or townhouses.
Cost of Buying a Property in The UAE
Whilst this may be a surprise to a lot of potential buyers the cost of buying property in Dubai is on the lower side when compared to most western or European cities.
✅ Fee Type ---------------------------- ➡️ Fee Description
✅ Dubai Land Department (DLD) ➡️ 4% of property price + 580AED Admin fee
✅ Property Registration Fee ------ ➡️ 4,000AED + 5% VAT
✅ Mortgage Registration Fees --- ➡️ 0.25% of the loan amount + 290AED
✅ Real Estate Agent Broker Fees ➡️ 2% of the property purchase price
Please note, all costs are paid at the time of purchase and only once.
To keep things simple, anyone looking at purchasing Dubai real estate should budget 6.5% of the total property price towards fees. Put simply a property with a price of AED 1,000,000 will have an all-inclusive cost of AED 1,065,000.
Cost of Selling a Property in The UAE
Just like there is no tax there is also no selling fees when selling a property in Dubai.
All the advertising costs are covered by the selling agent or agents who charge their fees to the buyer via an agency fee. It is worth nothing that a lot of sellers choose to pay the selling agent a 2% of the property purchase price as commission. This is usually done as an incentive and way to get the very best price possible.
The Property Tax in The United Arab Emirates
It’s a well-known fact that Dubai is a tax-free haven with no income tax whatsoever. In fact, it’s a big reason why so many expats choose to move to Dubai in the first place.
What is less know however is that being and/or selling Dubai real estate is also free from any tax. This means that if you were to purchase a property for say AED 1m and sold the same property for AED 2m 10 years later there would be no tax payable on the 2m sales price or the 1 million in capital growth. This applies to both owner-occupied and investment properties.
In addition to no capital gains tax, any income generated from a property in Dubai is 100% tax-free. This is greatly attractive for buy to let investors and a scenario investors in most other countries could only dream about.
Other
questions
What Currency Can I buy in?
The official currency of Dubai and the UAE is the UAE Dirham. The dirham is pegged against the US dollar with a fixed exchange rate of 1 USD = 3.67 AED. This means that the value of the dirham is always stable against the dollar making it one of the safest currencies to do business with.
But now also Crypto currency are everywhere accepted.
Is buying in The United Arab Emirates safe?
Buying property in the UAE is extremely safe. The UAE government along with the relevant regulatory bodies have gone above and beyond to ensure buying in the city is not only safe but attractive for all those interested.
What is the Dubai Land Department and what does it do?
The Dubai Land Department or DLD as it’s often referred to is a government-run entity in Dubai that oversees all real estate-related trading operations. Its primary function is to legalize the sale and purchase of land, boosts investment, and provide customers with a highly integrated, transparent, and secure real estate experience.
Can a foreigner buy real estate in the UAE?
Yes, foreigners of all nationalities can purchase property in any of UAE´s designated freehold areas. Only some local areas are not possible to buy a property.