Things to know before buying property in Dubai

Dubai’s real estate market is full of promise, but is it really as straightforward as it seems?  Many people are drawn to the idea of owning property here, but the process isn’t just about choosing a place you like. There are hidden costs, rules, and details that can make the experience tricky. If you’re not careful, the steps can get overwhelming. In this blog, we’ll cover the key things you need to know before buying property in Dubai so that you can approach it with the right information.

Key Takeaways

• Foreign buyers can purchase property only in designated freehold areas, while leasehold properties grant usage rights for a fixed term without land ownership.
• The total cost of ownership extends beyond purchase price and includes Dubai Land Department fees, annual service charges, and ongoing maintenance.
• Service charges vary widely by building and location and directly affect long-term affordability and rental returns.
• Rental yields and demand differ by community, with some mid-market areas outperforming premium locations in consistency and occupancy.
• Off-plan purchases require close review of payment schedules and escrow compliance to reduce delivery and cash flow risk.
• Community rules can restrict short-term rentals, pets, or usage, which may impact lifestyle or investment plans.
• Properties in areas with sustained demand and planned infrastructure have greater resale potential over time.

What Are the Rules for Buying Property in Dubai?

Understanding the regulations surrounding property ownership is one of the first things to look when buying property in Dubai. The UAE government has implemented clear rules to protect buyers and maintain a stable market.

• Freehold Property: As a foreigner, you can own property outright in designated freehold areas. These are locations where non-UAE nationals can buy and fully own properties without restrictions. Popular freehold areas include Dubai Marina, Palm Jumeirah, Downtown Dubai, and Business Bay.
• Leasehold Property: Leasehold properties are also available, but they come with time-limited leases, up to 99 years. You’ll have the right to live in or use the property for the duration of the lease, but you do not own the land beneath it. These properties are usually in specific areas.

If you're a non-resident, make sure the property is in a freehold area prior to buying. Always check with the Dubai Land Department (DLD) or a trusted real estate agent for the latest rules on property ownership.

What to Consider When Buying Property in Dubai?

When buying property in Dubai, think about the location, property type, and budget. The area you choose impacts your daily life, whether it's close to work, schools, or places to relax. Different property types, like apartments or villas, come with their own rules and costs. Don't forget to budget for ongoing costs like service charges and maintenance, not just the price.

The key factors to understand before buying property in Dubai are outlined below:

Service Charges and Yearly Costs

It’s easy to focus only on the price of buying a property, but other costs add up every year. Service charges are one such cost. These are annual fees for maintaining shared areas like lobbies, pools, gyms, and gardens. The Dubai Land Department (DLD) sets these fees, and they can change depending on the size, type, and location of the property.

Service charges in Dubai usually range from AED 8 to AED 35 per square foot each year. Here’s a quick example:

• If your apartment is 1,000 square feet and the charge is AED 12 per square foot, you would pay AED 12,000 each year.
• In popular areas like Dubai Marina or Business Bay, the charge can be higher, around AED 20-30 per square foot.
• In quieter or older areas, such as Deira or Al Barsha, the charge is lower, at about AED 8-12 per square foot.

Government Fees

Apart from the purchase price, you’ll need to account for government fees when buying property in Dubai:

1. 4% DLD Registration Fee: Calculated based on the purchase price. For example, a property costing AED 1,000,000 would incur a registration fee of AED 40,000.
2. Administrative Fee: This fee ranges from AED 2,000 to 4,000, depending on the property's value.
3. Mortgage Registration Fee: If using a mortgage, you’ll pay 0.25% of the loan amount + an AED 290 administrative fee.
4. Title Deed Fee: Around AED 250 for issuing the title deed after registration.

Rental Income Varies by Area

If you plan to rent out your property, it’s important to understand rental income. The money you can make from renting can vary widely depending on the area. Some middle-range neighbourhoods can give you better returns than luxury areas. If you’re not living in the property yourself, this matters a lot. Communities with steady demand are easier to rent out, while others might take longer to find tenants. Always check the area’s rental demand before buying.

Payment Plans and Escrow

If you're buying an off-plan property, check the payment plan. Developers offer flexible payment options, but it’s essential to review them carefully. Ensure that the payment schedule aligns with the expected handover date. Sometimes, the payments may not match what you actually pay when you take possession of the property, which can affect your cash flow.

Additionally, ensure the developer follows the rules for escrow accounts. These accounts are designed to protect buyers. In an escrow account, the funds you pay are released to the developer only after specific project milestones are met. This provides security, ensuring that the developer uses the money solely for the construction of the property, and it helps reduce the risk of fraud or incomplete projects. Be sure to verify the escrow account details before committing to any off-plan purchase.

Community Rules and Regulations

In Dubai, each community has its own rules that can affect how you use your property. These can include rules about parking spaces, the number of pets allowed, or whether short-term rentals are permitted. Some communities may not allow short-term rentals, which could impact your income if you plan to rent out the property. It’s a good idea to check with the community management or developer to make sure the rules fit your needs before making a purchase.

Resale Potential

Buying property in Dubai requires careful planning. Areas with steady demand, either from renters or buyers, are easier to sell. Properties in neighbourhoods with planned improvements or developments usually make good investments. On the other hand, properties in areas with less demand might take longer to sell. If you care about resale value, research the future growth and price potential before buying.

Tips for Buying Property in Dubai

When buying property in Dubai, it's essential to approach the process carefully. You want to make sure that your investment aligns with your needs and goals. Here are a few things to keep in mind that can guide you toward a smart purchase.

Understand the Market

Take the time to understand the Dubai real estate market before making a property purchase.  Prices can change, with some areas seeing quick rises, while others stay steady or even drop. Look into trends in different neighbourhoods and talk to local real estate agents for advice. Make sure you know if the property you’re interested in is in a popular area or a developing one that could bring good returns in the future.

Consider Your Financing Options

You don’t always need a mortgage to buy property in Dubai, but it's good to know your options. As a foreign buyer, you can get a mortgage, but there are limits on how much you can borrow (usually 50–75% of the property’s value). Different banks offer different rates, so it’s a good idea to compare. If you plan to pay the full price upfront, be prepared for additional costs such as registration, legal, and inspection fees.

Check the Developer’s Reputation

If you're buying an off-plan property, make sure to check the developer’s reputation. Look at their past projects to see if they finished on time and met expectations. You can find reviews from previous buyers online or do a quick Google search. Also, check if the developer is licensed with Dubai’s Real Estate Regulatory Agency (RERA) to ensure they’re trustworthy.

Location Matters More Than You Think

The price of a property often grabs your attention first, but the location is just as important. Dubai has many areas, and some are more sought after than others because they’re closer to work, schools, shopping, and transportation. Areas like Downtown Dubai and Dubai Marina are popular for their central locations and many lifestyle perks, but they come with higher prices. On the other hand, places like Jumeirah Village Circle and Dubai Sports City offer more affordable options while still being convenient.

Mistakes to Avoid When Buying Property in Dubai

Buying property in Dubai can be a great investment, but there are common pitfalls that can turn a dream purchase into a headache. It's easy to get caught up in the excitement, but being careful and informed can save you a lot of trouble down the road.

Overlooking Hidden Costs

When buying property, many buyers forget to plan for extra costs that come along with ownership. These costs are ongoing and need to be factored into your budget. You’ll need to consider property insurance, maintenance, and repairs or updates that may arise after the purchase. Another essential cost to keep in mind is service charges, which can vary by property type and location. These charges cover the maintenance of shared spaces, security, and other community services.

Ignoring the Fine Print

A common mistake is not reading the details in contracts. Whether you're buying an off-plan or ready-to-move-in property, make sure you understand everything in the agreement. Check the handover dates, payment plans, and any warranties offered by the developer. If anything is unclear, it’s a good idea to ask a lawyer or legal expert to make sure you’re fully protected.

Forgetting the Long-Term Picture

When buying property in Dubai, it’s important to think of the future. Consider if the property will meet your needs later on. Is it a good option for rental income? Will it be easy to sell in the future? What’s the potential for the area to grow? Thinking ahead ensures you make a wise decision that works for you in the long term.

Skipping the Inspection

It’s easy to rush the process, but don’t skip the property inspection. Whether the property is new or old, always have a professional check it before buying. Inspections can uncover problems you might not see, such as structural damage or plumbing issues. Catching these early can save you money and trouble later.

Is It Safe to Buy Property in Dubai?

Yes, it is safe. Dubai is one of the safest cities, with strict rules to protect property buyers. Whether you choose an off-plan property or a ready-to-move-in one, the Dubai Land Department (DLD) makes sure that every property transaction is transparent and fair. When buying off-plan, escrow accounts protect your money, where your payment goes directly toward the construction of the property.

The DLD also checks property ownership, so you can feel confident that the property will legally belong to you once the deal is complete. Dubai also hosts property shows and real estate exhibitions to boost market confidence.

Conclusion

Buying property in Dubai is an exciting journey, but it’s essential to be well-informed before making any decisions. From understanding the costs involved to knowing about community rules and resale potential, the things to know before buying property in Dubai go beyond just price and location. By keeping these factors in mind, you can make an informed, confident choice and avoid common mistakes along the way.

If you’re a first-time property buyer in Dubai, take your time to research and ask questions. The market here is competitive, and the more you know, the better equipped you’ll be to make the right decision for your future.

Make your property investment in Dubai a success. Contact us today for expert guidance and the best opportunities in the market.