Whether you’re a first-time buyer considering putting down some roots in the United Arab Emirates or you’re an expat investor looking to grow your portfolio and unlock a new revenue stream, buying in the UAE is a smart move. Although property prices and rental yields have actually fallen in recent years due to oversupply, it’s still possible to secure a property that will pay dividends in the years and decades ahead. In cities such as Dubai, investing in property can offer generous rental yields, with investors achieving between 5-10% returns per annum, and world-leading tax conditions mean that you’ll hold onto all of your earnings.
However, you should not take the plunge until you’ve done your research and are confident that investing is the right decision for your family. Below, we’ve rounded up some questions that you should ask yourself before you make an appointment with that estate agent…
Perhaps one of the most important questions to ask as an expat investor is whether you can buy property in the UAE without being a national. The good news is that anyone of any nationality, whether they are living in the UAE or are living abroad, can purchase a property in the freehold market. You don’t need to hold any type of residency or a permit to buy a home, and in actual fact, buying one could grant you residency. Indeed, if you’re buying a property valued above AED 1 million, you could be entitled to a two-year residency visa, and if you’re buying a property worth AED 5 million (around £950,000) you’re eligible for a five-year residency visa, which is a great way to secure temporary or permanent residency.
Those who purchase a property valued above AED 10 million could be entitled to a 10-year residency visa, though it’s important to remember that there is a range of conditions that must first be met. It’s always worth speaking to a mortgage adviser in the UAE for advice.
Just as you would if you were buying a property in any other country, you’ll need to prove to a lender in the United Arab Emirates that you earn enough money to pay back a mortgage and prove where your deposit has come from. An accountant can help with transparency.
Now that the first question’s settled, next up is finding the right property for your needs. The truth is that this depends on what you’re intending to use the property for - your requirements will likely be very different if you’re investing in a buy-to-let property versus as a permanent residence in the country. Review the location, spend time getting to know the neighbourhood and local amenities, and think about things such as transport, education, and supermarkets.
The size of your property should also be a key consideration - for example, if you’re planning to settle down and have children in the coming years, investing in a larger property with spare bedrooms is a sensible idea. A recent study found that homes in Dubai are getting smaller to cope with demand and increase developer profits, so think about what you’re going to be using your property for. Quality is also important - you might pay more for fully specced-out kitchens and bathrooms, but it’ll save you money in the long-run. If you’re buying a new-build apartment, you might be able to haggle with the developers and get some extras thrown in, such as upgraded kitchen appliances or premium fitted flooring.
Other things to consider before choosing a property include maintenance costs (check out this handy guide on service charges in apartment complexes) as well as market conditions and the timing of your purchase. Speak to agents about the rental market if you’re planning to let out your property. If they’re struggling to fill existing inventory, you might find it tough to find a tenant and might decide to invest in a different town or find a more ‘rentable’ property.
Although you might be more tempted to invest in a larger property such as a villa or a townhouse, offering more freedom and space, apartments are typically in higher demand and can command higher rents. That’s because the average renter is geared more towards affordable living, and the UAE has a transient population where workers come and go.
Property experts recommend that you invest in property in well-established neighbourhoods with strong transport links and facilities such as schools and hospitals and that you choose smaller, one or two-bedroom apartments. That’s because smaller units can sell and rent much faster, which is great if you want to liquidate some of your assets years down the road.
According to Property Monitor, the average yield in the Dubai Investments Park area for an apartment is 7.76% and 5.50% for a villa. Click here to view the full resource before buying.
One reason many expat investors steer clear of investing in UAE property is because of the price. When you visit a site like Rightmove and see properties listed for millions, it can be off-putting and make you think that buying a property portfolio is an impossible dream.
The good news is that there are a number of lenders and specialist brokers who can help you secure funding for your buy-to-let investment, though UAE Central Bank regulations stipulate that expats must produce at least 25% of the purchase price for properties worth less than AED 5 million. For nationals, the deposit is 20%, but it’s still a big commitment.
There are, of course, other costs to consider when buying a property in the UAE. As well as furnishing and insuring the property, you’ll need to pay for transaction costs, which can range anywhere from 5-8% of the purchase price, and agent fees should you list your property on the rental market for listing and marketing your property to potential tenants. You can cut out the middleman and do this on your own, but it can be very stressful and time-consuming.
Finally, decide whether a new-build property is right for you. The UAE is growing at an unprecedented rate, and another 25,000 new housing units are expected by the end of 2025. There are lots of benefits to buying a new-build - you’ll likely be able to negotiate with the developers and secure a cheaper deal, and there’s a likelihood that the property will appreciate in value before completion and handover, meaning you’re instantly profiting.
It’s also possible to secure a new-build with a smaller deposit, as government and developer schemes have been introduced to make buying a property more affordable, and developers also offer payment plans where you can effectively rent the property before repaying your debts. There are, of course, downsides to buying new-build properties; market conditions can change overnight, and that could lead to your property losing value before completion.
If you’re buying an off-plan property, you’re also exposed to delays and even cancellations, so it’s essential you research developers and ensure they have a good reputation. Off-plan properties can also be located in areas with poor infrastructure - buying in an area that’s more established is always preferred and offers benefits to you and your potential tenants.
Still on the fence about investing in property in the UAE? Speak to an independent financial adviser who will be able to offer advice tailored to your circumstances. Whatever you do, we wish you the very best of luck on your journey. Check back to the blog soon for more advice.
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