Dubai occupies a leading position in terms of expats in the UAE. The loyal visa policy of the state and a large number of free zones for real estate purchasing by foreigners attract not only those who are going to move here to permanent residence. Many are considering property for sale in Downtown Dubai the UAE, and other popular areas of the emirate as an investment. Let’s figure out why it is profitable to invest in the UAE housing stock.

Attractive Taxation in the UAE

There are no personal income taxes in the emirates. People don’t pay taxes on any type of profit, including profit received from real estate leasing. There are also no taxes for purchasing and owning real estate, its inheritance, and disposal in any other way. You can give an apartment to your close relative as a present without paying a fee.

The only exception is the registration fee when you purchase a property. It is 4% of the property price. Many developers pay the total registration fee or 50% of it by themselves in case you invest in an under-construction property. This term is quite attractive to investors.

For businesspersons, there is also preferential tax treatment. If you register a company in one of the free economic zones, there is no VAT payment or corporate taxes, as well as there are no income taxes. So far, other companies registered in other areas do not pay it, but since 01.06.2023 changes are coming. For a business with an income of more than $100,000 per year, there will be an income tax of 9%.

Dubai @ Piccaya
Dubai @ Piccaya

A Booming Real Estate Market

In Dubai, there is a wide range of properties on offer for buyers with different income levels. You can purchase both a low-budget studio apartment worth a bit more than $100,000, or a luxurious villa or penthouse at a price of several million US dollars. At the same time, all real estate units are equally high in demand. Moreover, interest in luxurious residences is growing steadily.

Together with the interest demonstrated by the buyers, prices are rising. During the 1st quarter of 2022 only, real estate has risen in price, and the average cost of 1 square meter reached $6000. This is 7.5% more in annual calculus. The number of transactions is also growing steadily. The analytical data for the 2nd quarter of 2022 indicate that in Dubai 9.6% more real estate units were sold than during the same period last year. The total transaction cost reached $16,000,000,000.

Among foreign investors, waterfront properties are most in demand. Such properties open up wide opportunities for comfortable rest and are also in demand among potential tenants. Despite the extended coastal line of Dubai, the number of free space for development is rapidly reduced. The higher the demand, the greater the likelihood that in 5 to 10 years it will be necessary to choose among the secondary housing stock only. The increase in prices will be inevitable, so investments in waterfront apartments are potentially highly profitable.

Favorable Payment Terms for Non-Residents

Foreign investors can get a mortgage loan. The state benefits from receiving foreign capital, so it does not impose any strict restrictions on non-residents. The only downside is that usually, the conditions for foreign buyers are less attractive than for UAE citizens. Foreigners usually can claim a smaller amount, and interest rates may also differ. But here much depends on the terms of a particular financial institution. The average credit rate is 3.8 to 4.2% per annum. Mortgage terms range from 10 to 20 years. For senior persons, credit may be denied.

Requirements for foreign borrowers relate to financial solvency. A bank statement on the account balance for the last 6 months or a year is required. Mortgage registration terms vary from 1 week to 1 month, it depends on the correctness of filling in the necessary documents and the specific bank.

In the case of property purchasing, the installment plan offered by the developer is usually the best. It does not provoke additional expenses and involves an initial payment with further division of payments within a certain time frame. Most of the property price is paid at the time of commissioning. You can find properties that provide additional installments after the development is completed. Another advantage of buying off-plan real estate is its favorable price. It is at least 15-20% cheaper than at the time of the development delivery.

Visa for Purchasing Real Estate in Dubai

Giving “golden visas” for real estate purchasing is another measure by the authorities aimed at stimulating foreign investors’ interest. Now, to obtain a 10-year residence visa, it is required to purchase a property worth more than $547,000. Until the changes in local legislation were adopted in 2022, this amount was 5 times higher. Innovations touched on a few more items:

  • You can buy not one, but several properties;
  • It is allowed to purchase not only finished but also under construction properties;
  • The use of credit funds is allowed but only received from state-approved banks.

The holder of a residence visa can apply for it for his wife and children. There is also the possibility to obtain a residence permit in case of purchasing less expensive housing. Buying a property worth $204,000 or more entitles you to a 3-year visa. Later, you can extend this visa, but only if the right to have this visa is retained: you can’t sell the property on the basis of which the residence visa was obtained.

Lack of Restrictions on Apartment or House Management

Foreign citizens can rent their property out without being a resident. The most common arrangement is trust management of the property by a local company. The management company takes on all the troubles of supervising the real estate unit condition and searching for tenants. This service costs 20% of the annual income received from renting the property out in this area.

The Possibility of Getting High Recurring Income

Return on investment in Dubai reaches 7%. Waterfront properties, as well as developments in the central areas of the city, are in high demand. Vacationers prefer studio apartments and 1- or 2-bedroom apartments. Villas and premium residences are most often preferred by wealthy tenants who look for long-term property renting. For further details about the most profitable real estate sales offer in Dubai, please visit the official website