# buying property in dubai



## EmilyLouise1988 (Jul 24, 2013)

Hi all,

myself and hubby have been here 6 months, in rental in the greens. we are just considering whether to look at buying when our contract comes up for renewal in Sept, and if we can even afford to do so. few questions id appreciate your insights on:

1) what is the current feeling on investing in property here? our stance is that prices will rise up until 2020 at the least, and now is a good time to get on the ladder?

2) are there any restrictions for expats buying property here?

3) i understand that a 25% deposit is required for a mortgage? and 5% tax? is this correct?

4) We will be on quite a tight budget due to highish deposit required, and we are both young first time buyers..... i suppose we will could look at property for around AED 950,000- 1,000,000. Where is a good area to invest around this price mark? Also as well as investment opportunity, wed like it to be a decent area to live. We have a dog, so ideally a small villa, but we expect an apartment may be the only affordable option? we dont need to be in the centre of things or on metro line, but would like some kind of community, ideally of expats. will be sad leaving the greens as we love it here but prices here to buy will be too much i think.

many thanks for your help!!


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## Stevesolar (Dec 21, 2012)

Hi louise,
You really need to be looking at a smaller place in a popular area - rather than a bigger place in a less desirable place.
Somewhere near to a current (or future) metro station will always be more popular if you want to sell or rent in the future.
If your budget is really only 1,000,000 AED - then you wont be looking at anything much more than a studio apartment - if you stick to popular areas.
Villas that are worth having and that are not off plan ( very risky here!) - start at around 5,000,000 AED.
Cheers
Steve


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## EmilyLouise1988 (Jul 24, 2013)

Stevesolar said:


> Hi louise,
> You really need to be looking at a smaller place in a popular area - rather than a bigger place in a less desirable place.
> Somewhere near to a current (or future) metro station will always be more popular if you want to sell or rent in the future.
> If your budget is really only 1,000,000 AED - then you wont be looking at anything much more than a studio apartment - if you stick to popular areas.
> ...


Hi Steve,

So would you say it is worth steering clear of the developing communities like JVC and JVT? You can get quite a large 1 bed apartment there for under 1mil atm. We thought there may be potential to make some gains there as the prices will inflate as the communities develop? this is riskier though i know....!


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## Mr Rossi (May 16, 2009)

Trouble with *investing* in property in Dubai is you really don't know what is around the corner. The potential tangents for something to go wrong are many. Discovery Gardens and even International City looked viable opportunities at one point. 

Unless you're Syrian, Egyptian, Libyan etc and looking to secure your savings or can afford to take a punt the risk/reward isn't there for you. Especially when you can pick up a 1 bed apartment in Zone 4 London, as a much securer nest egg. 

If you're looking to buy somewhere and live in it, then that's a different matter. If you plan on being here 15 years, for example, and are looking at offsetting the cost against future rent then it could be worthwhile. But then look at buying a home you actually want to live for that amount of time and if it's worthless by the end of it, you'll have still had value for money and saved on your personal expenditure.


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## sammylou (Oct 29, 2012)

keep in mind you could have up to 8% extra in fees/commissions to pay on top of the net purchase price.

i have responded extensively in other posts in the last couple months. just do a quick search and you'll find quite a bit of info.


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## TallyHo (Aug 21, 2011)

You've only been here for six months.

There are plenty of us who remember the last property market crash in 2008-2010 when prices dropped by more than half. Prices are almost up to where they were just prior to the crash, does it mean there will be another crash? Who knows. But the idea that prices will continue to rise till 2020 is ridiculous given that it'd mean no one would be able to afford to live in Dubai.

How long do you think you'll be in Dubai? I know many people who came here with a three year plan and ended up staying for ten years or longer. I also know many people who wanted to stay for the rest of their lives but had to leave, usually unexpectedly and quickly, in just a year or two. Expatdom is very unpredictable - redundancies, job opportunities elsewhere, or the sudden feeling that "you've had enough." A few relocation experts I've talked to say the typical expat duration is 3-5 years. Staff turnover in my company, which is a very established multinational with a great office environment and packages, is still pretty high compared to what it'd be in the West. 

If you only stay for 3-5 years, you need to offset any potential savings from any *potential, not guaranteed* rental increases with the ever increasing maintenance fees, *potential but not guaranteed* property crash II, unexpected adjustments to mortgage rates and a slew of other expenditures.

Owning property has definitely worked out for many buyers, but it's also turned into a nightmare for others. 

My personal opinion is that the UAE property market is going to be prone to wild swings in value over the next few decades so it will be a gamble for the foreseeable future. If you must buy an apartment, buy into the most expensive area as you can and especially Emaar buildings. Marina, Downtown, the Greens, even the Palm will always be highly desirable and command premium even during a property crash. At least, it'd be quicker to sell a property in those areas even if you have to take a loss during a down market.


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## EmilyLouise1988 (Jul 24, 2013)

TallyHo said:


> You've only been here for six months.
> 
> There are plenty of us who remember the last property market crash in 2008-2010 when prices dropped by more than half. Prices are almost up to where they were just prior to the crash, does it mean there will be another crash? Who knows. But the idea that prices will continue to rise till 2020 is ridiculous given that it'd mean no one would be able to afford to live in Dubai.
> 
> ...



Thank you, these are just the kind of insights we needed! I have always felt cautious but my husband was keen. we need to do some serious thinking about it as this will be our first property and we dont want to take risks with it.

My husbands concern is that rents will keep spiralling upwards, and we will be caught in a rent trap if we dont buy. We plan at least 5 years here.

Thanks again


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## BedouGirl (Sep 15, 2011)

I think, if you can offset would you would pay in rent against what you would pay to buy and not go in with the hope of making something on it, then it could be a consideration. A friend do mine, who has lived here for almost 20 years, is now doing just that. She's fed up of moving every two years and did her sums and came to this conclusion.


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## DuabiExpat (Feb 27, 2014)

EmilyLouise1988 said:


> Hi all,
> 
> myself and hubby have been here 6 months, in rental in the greens. we are just considering whether to look at buying when our contract comes up for renewal in Sept, and if we can even afford to do so. few questions id appreciate your insights on:
> 
> ...


Hi there,
so let me answer your questions one by one

1. Investment in property is bullish. Having said that one should not just invest in property because everyone is doing it. You have to find value- you will need to a consider intrinsic factors like, finishing, value, RoI etc. Balance these with external factors like location, developments, infrastructure

2. There are no real restrictions on foreigners buying property. As long as you can put down a deposit of 25% and then get a loan approval (which has become very easy now) you can finance your property

3. I am not a hundred percent sure on the 5% tax

4. Getting a villa for that price is slightly difficult. You could however check out certain places which are lease hold areas, but have excellent returns, appreciation value etc. I would look at DSO, possibly JLT and Dubai Marina. You can find a property for about 1.3 million in Dubai Marina, so if you can get a loan on the deposit amount (there is a way around that) you may be able to afford that.

Good areas of investment: 
1. Discovery Gardens ( do not listen to people who tell you otherwise, one of the best areas, community feel, and if you can get a good unit, you will be set)
2. DSO
3. Dubai Marina
4. JLT

You could call this guy I work with, ( I used to do some investments around Dubai and Abu Dahbi), and he can guide you if you guys need more info

/snip/
Tell him, John from Barclay's referred you.

Wish you guys luck!


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## QOFE (Apr 28, 2013)

Please do thorough research before committing yourselves financially. It might not be a good idea to buy a property if you need to borrow money for the deposit and other related expenses.

Discovery Gardens might not be your best bet. Google Discovery+gardens+flooding to check out what issues you might have living there.


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## DuabiExpat (Feb 27, 2014)

This is an investment, which would mean long term gains. The reason I had mentioned Discovery Gardens is because of the heavy infrastructure development going on there (eg: the interchange)


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## Bbay2Oz (May 10, 2010)

TallyHo said:


> You've only been here for six months.
> 
> There are plenty of us who remember the last property market crash in 2008-2010 when prices dropped by more than half.
> 
> Owning property has definitely worked out for many buyers, but it's also turned into a nightmare for others.


I remember that so clearly, like it was just yesterday. I also remember the recession in '96.

Unfortunately, due to the nature of my job, I knew far more people for whom it turned out to be an absolute nightmare. Many did well though. Banks can be very unforgiving if you lose your job and have a mortgage. So I'd think twice before taking on a huge debt to buy a property in Dubai.

Are you comfortable investing so much in the UAE - your job, all your saving etc? Eggs...basket..comes to mind. I wouldn't, but that's just me. I guess I am too risk averse.

Think carefully and make sure you understand all the risks (laws, your job, buying off the plan, who is the developer, finance, bank, economy....) before plunging into property investment.


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## Edino (Sep 22, 2013)

I never got into buying property here. 

There are lots of things that has hold me back from buying property in this country, like market unpredictability, absence of protecting laws, poor build quality (but high prices), and the high service costs which need to be paid to the developer, and this still excludes any maintenance within property boundaries. This is quiet generalized, but I truly believe there are not to many good deals out there that outweighs the risk of investment here. 

Besides all of this, I am an western expat, so this is my temporally home and my status in this country is solely dependent on having a job; I would not like to have a large asset sitting in this country if I would have to leave within 30 days. 

What many people think as unthinkable, is when the owner passes away while having a mortgage. The laws in place in this country carry no protection at all for the family left in the country to keep the mortgage payments going. At time of dead, all accounts are instantly frozen, and the first bounced cheque will be followed by a criminal case in court. The next of kin will be carrying all liabilities, and may not be able to resolve this for many several years and is basically stuck here as leaving the country is blocked by the authorities. 

I am here for nearly 30 years, and sofar have have not been into issues with renting property (no major increases, and no maintenance issues). I am now in my 4th property during my time here, and always rented from either Dubai Real Estate department or local companies that invested in properties, never in freehold areas (whatever they are called).


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## Malbec (Jan 2, 2014)

Sometimes when I am reading this forum and stories like the one above it makes me wonder where are some of you coming from  Seriously:

30 years in UAE called "temporary" stay... ?!
30 years of renting without purchase investment...?!

Lack of security in terms of mortgage and accidental death? Have you not heard about life insurance products that you take together with mortgage?

So if I buy property in Netherlands and pass away, government will pay my liabilities and next a kin will benefit from trouble free ownership? :shocked: I am moving there tomorrow! 

Bounced check? It is unbelievable for me that people are signing checks not having sufficient amount. I would call it daylight robbery. I am sure all those complaining here would be "happy" if someone's cheque for e.g. selling or renting property would... bounce back.

I can probably agree about the build quality but then again, I have never seen Europeans happy with build quality anywhere except Europe


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## Budw (Oct 14, 2013)

Malbec said:


> Lack of security in terms of mortgage and accidental death? Have you not heard about life insurance products that you take together with mortgage?


You should speak to a laywer and understand what will happen after an expat dies in Dubai. 

A life insurance is a good cover, but for longer term only. The problem lays itself on how Dubai/ UAE laws execute once a expat passes away. in short, first all UAE accounts are frozen, until its proven that all liabilities are covered. Can take months! There will be several months of paperwork just to cover the life insurance payout for these liabilities. In the mean time, other costs will continue to creep up and cheques will bounce, leading to court cases; its a very stressful period, where the person also should try to survive. The one thing that would help here is to ensure there is a legal approved will; but still its going to be time consuming.


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## Bbay2Oz (May 10, 2010)

Malbec said:


> Sometimes when I am reading this forum and stories like the one above it makes me wonder where are some of you coming from  Seriously:
> 
> 30 years in UAE called "temporary" stay... ?!
> 30 years of renting without purchase investment...?!
> ...


Not sure if you're trolling, so I'll bite.

You sign a post dated cheque for the total principle amount of the loan. You then use the loan to purchase the property or whatever else you need it for. 

You then unfortunately happen to lose your job. Banks immediately send your cheque in clearing. It bounces unless you happen to keep a couple of millions or whatever amount you borrowed lying in your account just to make sure the cheque doesn't bounce. 

There is no insurance that covers loss of job or a policy that keeps you out of jail.

Just for your information, a lot of banks do have contacts with staff in the HR departments of various companies and are immediately made aware after a person loses their job.

I can go on about sharia laws and a lot of other risks but Edino has covered that quite succinctly in his post - which I fully agree with. I lived there for 15 years, worked in a bank and used to approve large mortgages loans. I neither bought any property nor had any form of other investments in the UAE.


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## TallyHo (Aug 21, 2011)

A pretty high percentage of property transactions are paid in cash - no mortgages involved. That's the safest way to own property in the UAE and the only way I'd do it.

The other downside to a mortgage that someone hasn't brought up yet is that the banks here have changed the mortgage terms, including the interest rates, at will. There was nothing the mortgage holders could do about it. 

The people I know who made out like a bandit were those who bought off-plan in the very early years. 1.2 million for a 4-bed villa in Saheel in Arabian Ranches! They were able to pay off the mortgage quickly and are sitting happily. But we've long since missed that particular boat.


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## Malbec (Jan 2, 2014)

@Budw, good point regarding the will. It is probably something everyone should look at to not leave their dependants stranded.

@Bbay2Oz, so if you take 30 years mortgage loan and happen to lose job or simply leave UAE after some time, can't you just keep paying it?

I have noticed at lot of expats simply took UAE on a "ride". They took credit cards, made a huge debts and fled the country forgetting about debts... Sorry but for me it is unacceptable behaviour. I would always try to pay back whatever I own and I would never try to live the life I can't afford to.

I am honestly not surprised about certain security measures being implemented, I have not heard about such cases in Singapore, but in UAE it just seems to be something normal: spend your credit, leave the country, inshallah catching me 

Just look at this forum and see how many UAE defaulters are posting there. What the hell is wrong with expats there


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## Bbay2Oz (May 10, 2010)

Malbec said:


> @Budw, good point regarding the will. It is probably something everyone should look at to not leave their dependants stranded.
> 
> @Bbay2Oz, so if you take 30 years mortgage loan and happen to lose job or simply leave UAE after some time, can't you just keep paying it?
> 
> I have noticed at lot of expats simply took UAE on a "ride". They took credit cards, made a huge debts and fled the country forgetting about debts... Sorry but for me it is unacceptable behaviour. I would always try to pay back whatever I own and I would never try to live the life I can't afford to.:


I'm not sure of the current mortgage policies but in 2009-11, loss of employment was considered an event of default and your loan was required to be repaid immediately. 

The reason a lot of people fled the UAE was to avoid a jail sentence not trying to flee their debts per se. Banks never gave them a chance to look for another job (not that finding another job was easy - economy was bad, then the stupid laws where an employer wields so much power and can simply place a work/ visa ban at whim etc). As a banker, I found the behaviour of banks to be far more unacceptable. 

The 2009 crash took many by surprise (especially those expats who had arrived recently). They thought they had a job for life and Dubai was their "permanent" home. Little did they know just how unforgiving and unreasonable creditors can get when things turn sour. It was a repeat of what I saw happening during the '96 recession. I recall a businessman in our building had pledged his childrens' passport with his creditors as security. When he couldn't repay his debts, he and his wife fled the country, leaving both their kids behind. We were mortified. The kids were flow home a week later after the embassy intervened. Till then the neighbours/friends looked after them.


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