Considering Buying Dubai Real Estate? Here’s What You Need To Know

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With the American election just days away, many are considering whether it might be time to flee the country—or at the very least, invest in a foreign market. One of the hottest foreign markets right now is the United Arab Emirates, with Dubai real estate being especially attractive. But what is it really like for foreigners to purchase real estate there? Is the process all that different from the United States? Here’s what Americans need to know.

Dubai Is One Of The Easiest Places To Buy Real Estate

Dubai is one of the most popular foreign markets right now for a variety of reasons. There is no real estate tax, capital gains tax, or income tax—appealing to many buyers, especially those from the United States.

There’s also a major construction boom, with luxury developments being sold off-plan. Buyers can easily get in before the property is even built. “Off-plan projects typically require an initial down payment of 10 to 25 percent, with the remaining funds spread over three to five years, usually without any interest,” according to Mary Lee, a seasoned real estate investor and advisor with over seven years of experience in the Dubai market.

Lee emphasizes that the process is far simpler than in the United States. “Only a passport, email address, mobile number, a four percent Dubai Land Department registration fee, and a down payment are required. After that, the client can proceed with the process, and the Sales Purchase Agreement (SPA) will be issued. Once the SPA is completed, it will be registered with the Dubai Land Department.”

Re-selling properties is also less complicated because there are no attorneys involved. “There’s typically a reservation agreement with a 10 percent deposit of the property price. Once both parties agree, a No Objection Certificate (NOC) is required from the developer to proceed with the transfer. Transactions will be assisted by agents, and the transfer will be completed at the Land Department Trustee office, where a title deed is issued by the Dubai Land Department,” Lee explains.

While many buyers in Dubai pay in cash, it’s also possible to get a mortgage. However, according to Lee, the mortgage terms are typically shorter, usually 10 to 25 years instead of 30.

Like The Weather, The Dubai Real Estate Market Is Hot

As someone who has lived in Dubai for nearly a decade, Lee has personally witnessed the evolution of the city. “Amid the current global economic instability, real estate investment in Dubai is relatively stable and secure compared to other types of investments. In the short term, Dubai’s real estate market is expected to remain strong due to high demand, driven by factors such as tax-free incentives, attractive rental yields of five to eight percent, and investor interest in luxury properties and off-plan developments.”

The market has also boomed post-pandemic, in many ways due to the Golden Visa, which was established in 2019.

According to James Prince, a resident of Dubai and CEO of Prinden, a wealth advisory firm, this program changed everything. “The program gives people the right to stay here for up to ten years if they own property. This changed everything, and property values have gone up two to three times since COVID.”

Prior to this program, buying property was incredibly risky. “I was advising clients not to buy here because it was too risky, and other countries made more sense. There were a few horror stories from my clients who took a mortgage, lost their jobs, and had to leave the country. They couldn’t sell the house and ended up in jail.”

At the time, the laws didn’t allow foreigners to leave the country with debt, including a mortgage, even if they were renting out their homes. Now, it’s far less restrictive and more attractive to foreign buyers.

Lee anticipates this will continue in the foreseeable future. “The Dubai government is actively developing the economy across various sectors, attracting businesses from around the world to establish themselves in Dubai. As a result, there is growing demand for professionals in different fields every year.”

The ROI On Dubai Real Estate Is Higher Than Even The Tallest Towers

Still unsure about investing in Dubai? Lee says the local real estate market is currently offering some of the highest returns on investment globally, partly due to the short-term rental market, which is less restrictive than in other countries. Dubai is quite welcoming to these types of investments unlike America where there may be local ordinances against short term rentals. “Rental yields typically range from five to eight percent, with short-term holiday homes generating even higher returns,” she explains.

While there are no guarantees in any market, she says that for off-plan properties, capital appreciation can reach five to ten percent annually. “From the start of construction to handover, property values can increase by fifteen to 30 percent with some areas experiencing growth of 50 percent to 100 percent under the right conditions. The market is growing and offers high rental yields but can be more volatile than the U.S. market. This makes Dubai an attractive destination for investors seeking both rental income and significant capital gains.”

Many of Lee’s past sales have become significantly more valuable. “In 2019, I sold an entire building to an investor in Dubai’s Port De La Mer for 83 million AED. It is now worth a minimum of 140 million AED. My first investment was when I was 25 years old; I bought a small apartment in Dubai Downtown for 1 million AED, which is now worth 2.2 million AED, and I receive 135000 AED in rental income annually.”

What Is Life Really Like In Dubai?

At its heart, Dubai is an international city with people coming from all over the world. After coming from the UK, Prince and his family are incredibly happy with everything the country has to offer, although he acknowledges there are some tradeoffs. “We are still in a Muslim country, and we need to be respectful of their culture and their dress code.”

Despite the challenges such as being far away from family—the lack of taxes, excellent schools, and quality of life make living in Dubai worth it. “It’s literally the safest place in the world to live. Nobody steals anything. You can leave your wallet with money or your laptop on the dashboard of your car—leave it unblocked for a week, come back and it will still be there.”