Five factors to keep in mind before buying property in Dubai

Buying a home is never an easy decision. Probably the highest investment the vast majority of us make into a single purchase; our homes define the quality of our lives and are a marker of our status, based on their location, type, floorplans, and accessibility.

In a city as dynamic and ever-changing as Dubai, this is a decision that can present even more variables to consider. While Dubai remains a buyer’s market; property ownership related changes to residency visa regulations⁽¹⁾; incentives for first home buyers⁽²⁾; heightened post-pandemic interest from international investors⁽³⁾; and an Expo driven surge⁽⁴⁾; are making selecting the right property a more complex decision than ever.

Factors to bear in mind

While buyer’s priorities and capabilities vary a lot – based on whether you are an expat or a citizen, a first home buyer or someone who has prior experiences, and whether the intended purchase is an investment or a home to live in – here are some considerations that should inform your decision making:

Does it fit your budget?

The classic mistake made by many homebuyers is chasing their aspirations too far, and stretching their budget in the process. A good way to judge whether or not a home is affordable for you, is to ensure that your monthly home related outlay is at least a little less than a third of your salary. It’s also critical that you factor in any maintenance and annual fees the property will attract, as well the processing and regulatory fees that will be added on to the price of purchase.

What will the maintenance costs for the property be?

Fortunately the Dubai Land Department (DLD) has set very clear guidelines for annual maintenance expense, which you can determine using a Maintenance Index that varies on the basis of total square footage of your home, and arrangements put in place by your future community. Properties in Dubai also attract a RERA Service Charge, and you can find out all about these maintenance and upkeep related charges using handy information available on the DLD website.

What down payment will you need?

The initial down payment you require to buy a property is one of the most crucial factors influencing your decision. The UAE Central Bank Regulations stipulate that:

You cannot use a personal loan for a down payment.
Expats must furnish a deposit of 25% at a minimum, for properties worth less than AED 5 million.
UAE nationals must pay a minimum 20% deposit for properties worth less than AED 5 million.
Buyers can get a personal loan for bank and agent fees, as well as initial cost of transaction.

What conditions must your property meet, to qualify you for a residence visa?

The property investment linked residence visa has emerged as a popular method for foreign nationals wishing to become long term Dubai residents. Properties worth AED 1 million, or more, entitle applicants to either a 6-month multiple entry visa, or a 2-year residency visa; while properties worth more than AED 5 million, with no mortgage attached, make the buyer eligible for a 5-year residency visa. Be sure to check that you meet the eligibility criteria attached to these property linked visas.

What rental yield can you expect from your investment property?

Buyers that want an investment property; or those expecting to turn their home into one later in life; must factor in whether or not the expected rental yield will meet mortgage repayments, and ongoing maintenance costs. Inexperienced buyers can mistake a current rental projection as being the amount they can expect to receive monthly, for the entire duration of their mortgage. However, markets can be fickle. It’s best to get expert advice in this regard