Pros & cons of Real estate market in Dubai
Dubai is a favourite destination for both locales and expats looking to invest in real estate properties. But there is a big problem that most of the people cannot choose to rent or buy property. Before making any investment, consider your financial situation, short term and long term goals
Dubai is the second largest emirate in the UAE with an area of 4,100 square kilometres and has succeeded in becoming the most recognizable Middle Eastern city name internationally. Consumer interest in residential units in the fast growing metropolis is justified by the high standard of living, developed infrastructure and beautiful coastal tourist destinations. Anyone planning buying a home in this sunny city should be familiar with pros and cons of such a deal. Think about the pros and cons of renting or buying property in Dubai based on your goals. Here we will explain these pros and cons to help you decide on the best future investment
There are some factors that attract buyers to buy properties in Dubai which we are going to discuss below.
- Growth of population
- City in development
- Safety and stability
- Strict rules
- Booming tourism industry
- World class sports events
- An aviation hub
- An investment visa for investors in real estate
- Lack of taxes
- High rental yield
- Wide range of opportunities
- World class infrastructure
- Political situations and stable economy
- Easy relocation
- Growth of population: Dubai is one of the fastest growing cities in the world. In just 40 years, Population of Dubai has expanded by 1000 percent. Approximately 3,000,000 people live in the Dubai as of 2022. Most of the people are immigrants from more than 190 countries. Experts predicts that in the next decade this figure will double.
- City in development: Dubai will be a centre for ingenious and creative projects. Dubai mall, Palm jumeirah island, Dubai fountain, Burj khalifa, this city is in constant development and always targets at the top
- Safety and stability: The UAE is ranked as the third safest country in the world according to world economic forum. Immigrants and foreign investors attracted to Dubai due to Active government initiatives and stable legal system.
- Strict rules: Real estate regulatory agency (RERA) adheres to strict rules and regulations. A transparent policy protects the rights of investors and helps in the long term growth of real estate sector
- Booming tourism industry : Dubai has something for everyone; an adrenaline – filled desert safari, opulent spas, immense shopping malls, exhilarating wildlife tours, skydiving and exhilarating water park rides
- World class sports events: Dubai host some of the most dominant sports events of the world. The city is the centre of heed throughout the year with this. Omega Dubai classic golf tournament, Dubai tennis championship and Dubai rugby championship are the most famous sports events of Dubai.
- An aviation Hub: the Dubai city is located critically. 70 percent of the population of the world is within an 8 hour flight for the locals. This makes Dubai international airport as a busiest passenger hub of the world. Every year, 85,000,000 passengers pass through this airport
- An investment visa for investors in real estate: Buyers of property worth more than AED 1,000,000 can apply for an investment visa. It gives a chance to issue a UAE Citizen identity card, UAE Driving license and Residence permit for family members
- Lack of taxes: As per UAE VAT law, all life investments such as housing investments are considered as residential and subject to 0% VAT. First purchase of a property within three years construction is also subject 0% VAT
- High rental yield: the Dubai city shows one of the best rental incomes in the world. Although, compared to other international locations, the cost of earning a local property is much lower.
- Wide range of opportunities: buying a property or real estate in Dubai gives you different opportunities for better income. For example, after some time you can sell it at a higher price or rent it out for an income stream
- World class infrastructure: Dubai is modern and word class business hub with skyscrapers, swarming shopping malls and high tech transport network. The local metro of Dubai is the longest dismayed metro network in the world and the city continues its speedy development.
- Political situations and stable economy: Dubai is an oasis of stability amid all the unrest in the Middle East. As a result, the economy is constantly growing due to the success of real estate and manufacturing.
- Easy relocation: another advantage of investing in real estate marketing in Dubai is that you can relocate if you face an unexpected event. If you are working executive, especially an emigrant, you may need to dislocate to another emirate due to job opportunities. The best thing about renting is that you can easily cancel your rental agreement and leave your current home.
Above we have discussed the pros of real estate market in Dubai, but it is also a fact that they have some disadvantages. Let us see what they are.
- Not likely to be a UAE Citizen
- Absence of democracy
- Customization controls
- There are no taxes, but there seem to be
- Additional costs
- Overflow of new developments
- High cost of living
- Costs for property maintenance
- Sensitivity of volatile markets
- Not likely to be a UAE Citizen: when thinking about buying an apartment or villa for your retirement, you should remember that the best you can get is a long term residence permit. It means that when you not extended your residence permit, for whatever the reason is, you will have to leave the country
- Absence of democracy : you all know that the United Arab Emirates(UAE ) is a sheikhdom, so rules can change instantly without antecedent warning when there are no government elections or democratic governance
- Customization controls: you cannot customize the rented property as it is not yours. However there are few landlord who allow you to customize the property, most of them don’t like to spend money to add new features based on your interest.
- There are no taxes, but there seem to be: most of the normal taxes are absent in the UAE. But there are some kind of fees & charges for buying and selling real estate. A registration fee is need from 2013 to conclude a sale or purchase. This is 4 percent of the total cost. Depending on the terms of transaction, it may be split respectively between seller and the buyer or paid in full to the buyer. As per law licensed real estate agents are also required to include in the selling or buying of properties. A seller’s commission for a real estate agency’s services when purchasing real estate in the primary market is typically of 2 percent of the sales price.
- Additional costs: if you are buying a property straight from an off-plan developer, it means you are paying a fee of 4 percent of the property value to the Dubai land department. Which is matriculation of the title deed and admin fees. If you are looking release a mortgage for your new place, you can pay another 0.25 percent of the property value to the Dubai Land Department for something, which is known as mortgage registration fee. There are charges and fees payable after transfer, service charges for upcoming and maintenance of the area and DEWA fees for electricity and water
- High cost of living: Dubai’s high cost should be kept in mind if you are considering this city for permanent residence. Everything costs more in Dubai, sometimes many times more. Medical and educational expenses are very high
- Costs for property maintenance: it is the duty of every home owner to maintain their home. An association of owners or management, company may determine the amount of payments. As part of the payment you will be responsible for cleaning common areas, building security, garbage collection and maintenance of parking, swimming pool, gym etc..
- Sensitivity of volatile markets : because the real estate market is not always stable this can hurt owners who lease the property or use it as a residence or vacation home
When acquiring a local property, one of the things to consider is the inceptive costs associated with the process. If someone buys a housing unit directly from developer he has to pay a mandatory fee to the Dubai Land Department. It include a fee of 4 percent of the property value, fee for issuance of title certificate and administration fee. Mortgage buyers have to pay a registration fee of 0.25 % of the loan amount of the Dubai Lands department additionally the administration fee. Although this information will attract investors who intend to invest only in cash.
The informations we discussed above confirm that the investing in real estate in Dubai is a very attractive direction in the modern world.