# buying an apartment in Dubai



## flaminglamborghini (Feb 20, 2012)

Hi. Rather than paying dead money into a rented apartment, I would like to buy an apartment in Marina or downtown area. Assuming I can find a trusted real estate agent, what are the dangers of buying? Has anyone been through the process? Also, can you please itemise the expenses I will be up for, when purchasing? Much appreciated.


----------



## Elphaba (Jan 24, 2008)

The main dangers are the oversupply of apartments in the maket and a question mark over whether anyone ever really owns something in a country where the government can change the laws at any times. Ask anyone who bought in JBR.


----------



## rsinner (Feb 3, 2009)

Interested to know as well. 
After 4 years of paying rent, I am a bit tired of this. Of course I would factor in change in law etc, as a risk factor and not buy off plan.


----------



## woodlands (Jan 13, 2010)

1/ If there is such an oversupply of apartments why are the rents going up 20-30% in prime areas. Try finding a 3 bed in downtown. 
2/ Stick to prime property and you will be fine. The transaction charges are roughly 5% of property price. If you take a loan, there is another c 1.5% for arrangement fees etc.
All these fees would need to be paid in cash...in addition to your deposit. So if you are paying a 20% deposit and 80% loan, then you must have roughly 26.5% of the property's value in cash. 
3/ rent is not dead money, it's not right to think of it that way. What do you think interest on the mortgage is? Or service charges you pay as owner ? Or maintenance ? Or deposit earning no cash? 
4/ the most important question to ask is, will rents go higher or stay the same? What will happen to interest rates over next 10-15 yrs, will they remain low ?
How is the Dubai economy expected to perform over these years? 
5/ In places in UK and France government can change tax rules at any time and make it as punitive as they want. French ministers go about threatening nationalization of private assets to multinational companies. To say that sovereign risk in UAE is too high is just being overplaying it. Yes there are issues of war, geopolitical stability etc. but this country can pay its way out of most troubles, unlike most European countries.
6/ then you have to consider the arbitrage. Even in downtown Kabul 3 beds go for 900,000 usd. Think that's safe? Istanbul, delhi, rio, etc etc etc...same story....So if I see a 3 bed in downtown which has a garden and there are only 35 such units in downtown, at a price of 1,000,000 usd...it's a steal of a deal in my view. 
Buy a property on its intrinsic merits size, location, construction quality.. Be careful with external metrics that may change, a view, free club memberships, low service charges.. Etc


----------



## rsinner (Feb 3, 2009)

woodlands said:


> 1/ If there is such an oversupply of apartments why are the rents going up 20-30% in prime areas. Try finding a 3 bed in downtown.
> 2/ Stick to prime property and you will be fine. The transaction charges are roughly 5% of property price. If you take a loan, there is another c 1.5% for arrangement fees etc.
> All these fees would need to be paid in cash...in addition to your deposit. So if you are paying a 20% deposit and 80% loan, then you must have roughly 26.5% of the property's value in cash.
> 3/ rent is not dead money, it's not right to think of it that way. What do you think interest on the mortgage is? Or service charges you pay as owner ? Or maintenance ? Or deposit earning no cash?
> ...


Great post and couldnt agree more with most things.
Just one point - with rent you spend money and after 10 years you have nothing to show for it. With mortgage payments, at least you have an asset to show for the cash outflow, even though the cash outflow may be the same. 

And apartments here are cheaper to buy compared to the big cities in India. No wonder Indians are top of the list of people buying in Dubai.


----------



## Mr Rossi (May 16, 2009)

rsinner said:


> Just one point - with rent you spend money and after 10 years you have nothing to show for it.


And what's the deal with food, eh? You buy it, you eat it, but then what?


----------



## VitaEsMorte (Apr 26, 2010)

I recently bought in JLT, Green Lakes Towers. It took three months to finalize mortgage, paperwork etc. But since it is a prime property, now the price gone up. 

So I would highly suggest that you go for a prime property instead of an average property, since the overall quality is very low. 

Also, please consider mortgaging and banks carefully and consider taking legal/professional advise. Most of the time, there is a trick on what a bank suggests here, so you should be careful about bank's promises/written agreements. Also, there is no fixed interest mortgage in Dubai. Banks provide fixed interest for a term and then revert to variable rate (which is most of the time tied to EIBOR). This is also something that you should consider. 

I support your point, I also believe the same as having own apartment without rent and selling it when leaving Dubai with a premium. But we will see what will happen in the future


----------



## flaminglamborghini (Feb 20, 2012)

Hi. That's all fantastic advice. Exactly what I wanted to know. Thanks heaps.


----------



## zed_kid (Sep 25, 2012)

Mate don’t buy here, buy something back in Aus, we’re due for an uptick


----------



## woodlands (Jan 13, 2010)

zed_kid said:


> Mate don’t buy here, buy something back in Aus, we’re due for an uptick


Wait for the Aussie commodity bubble to burst.... If you want to buy on the way down... Why not? 
Have you heard what the RBA is saying ????


----------



## woodlands (Jan 13, 2010)

rsinner said:


> Great post and couldnt agree more with most things.
> Just one point - with rent you spend money and after 10 years you have nothing to show for it. With mortgage payments, at least you have an asset to show for the cash outflow, even though the cash outflow may be the same.
> 
> And apartments here are cheaper to buy compared to the big cities in India. No wonder Indians are top of the list of people buying in Dubai.


I am referring to only the interest portion of the mortgage , not the principal repayment... For the first 4/5 yrs for most 25 yr loans the interest is 80% of the installment/ mortgage ( as u call it).


----------



## flaminglamborghini (Feb 20, 2012)

I am an Aussie, about to move to Dubai. I am trying to sell my Aussie property, as I want to be considered a tax-resident of Dubai. I agree that now is a good time to buy property in Australia, but only if you are prepared to wait a long time for any capital gain. 
However, I was reading case studies on the ATO website, and people who were working in Dubai, but still had property etc. in Australia, were generally determined to be residents of Australia for tax purposes. If anyone has expertise in this area, I would love to hear your views.


----------



## xchaos777 (Dec 15, 2010)

You need to get your own professional tax advice. However, I would be very surprised that just owning property there forces tax residency.

Typically, it is based on where income is earned, amount of time spent out of home country, etc.


----------



## Beanieskis (Nov 27, 2012)

Hi, I'm likely moving to Dubai at some point next year, and may consider buying rather than renting.

What LTVs on mortgages are generally available at the moment?


----------



## VitaEsMorte (Apr 26, 2010)

Beanieskis said:


> Hi, I'm likely moving to Dubai at some point next year, and may consider buying rather than renting.
> 
> What LTVs on mortgages are generally available at the moment?


Up to %90. But it's tricky. Banks claim this and then cut the evaluation of the property, so you again face a LTV of %80. I suggest that you prepare your downpayment according to %80 scenario.


----------

