What makes the UAE the most attractive destination for real estate buying?

UAE is a popular place for real estate investments because, for a long time, the UAE held a reputation as a tax-free nation that garnered the attention of investors and businessmen from all corners of the globe and even though the country has moved away from being a tax-free government and implemented a Corporate Tax system to promote economic progress and advancement in the country.

It is still an attractive destination for realtors and investors. UAE offers a multitude of benefits for realtors such as regional safety, investor protection, full property ownership, absence of property, inheritance, and personal income taxes, and a long-term residence visa.

The tax system in UAE does not impose any property taxes on residential properties, which is one of its most appealing qualities. This exclusive benefit serves as an incentive for both domestic and foreign investors to explore the lucrative real estate market in the UAE.

The UAE provides some of the lowest property taxes compared to other major cities worldwide, rendering it a desirable and cost-efficient option for those seeking real estate investments. This affordability amplifies the attractiveness of the UAE’s property market to potential investors.

Why should you buy Real estate in the UAE?

You can gain immense benefits from buying a property in the UAE. Not only does the UAE offer great incentives for your investment but it’s also a great place to earn and live. The following is the list of reasons why you need to invest in this Middle Eastern region.

• Gain higher returns on investment: You can gain a higher return on investment by buying a property in Dubai. Dubai is the financial hub of the region and offers a higher return on investment for properties compared to renowned business centers like Hong Kong, London, and New York. The rental yield can range from 6% to 10%, depending on the location of the property which is significantly greater in Dubai than all other Emirates in UAE.
• High Standard & Safe Living Opportunity: UAE has it all from modern & smart cities like Abu Dhabi and Dubai to cities like Al Ain which have countryside ambiance. Impressive skyscrapers, cutting-edge malls, vibrant entertainment districts, and unbeatable security are only some of the reasons why purchasing property in the UAE is an excellent choice for both personal buyers and investors alike. UAE has one of the most secure cities in the world with low crime rates and innovative technologies enabling anonymous reporting that triggers prompt responses from authorities, so there’s no need to worry about safety concerns. The living standards are top-notch here. UAE promises a brighter future for all its residents.
• Long-term Residency: By investing 2 million dirhams in the property market of the UAE, you can qualify for a Golden Visa which grants long-term residency. This visa permits you to reside and work independently in the UAE for up to ten years without the requirement of an employer or sponsor. Moreover, this renewable permit provides not just stability but also gives access to experience one of the world’s most thriving safe, and smart cities.
• Ever-evolving investment opportunity: UAE is a rapidly evolving country, with architectural wonders like Palm Jumeirah and Burj Khalifa in Dubai that attract tourists and foreign investors from all around the globe making UAE the perfect place for investments. UAE has an ever-growing economy, with a myriad of entertainment centers, the government of UAE has no intention of slowing down its development projects anytime soon. Due to this progress and development buying a property in the UAE becomes highly beneficial. You can gain a guaranteed increase in capital appreciation and property valuation in the UAE.

Taxes and Fees for property purchasing in UAE 

The UAE has various free-hold and non-free-hold zones. Freehold regions are places where individuals who are not from GCC countries can buy real estate. Acquiring a property in a freehold area grants the buyer ownership of both the land and the housing unit on that land.

Once they have bought any home or plot in such an area, owners may then freely sell, lease out, or reside there at their discretion. However, only citizens of UAE and GCC countries have the privilege of possessing property in non-free holding zones. Another option available in the emirate is leasehold properties, which permit non-nationals to rent a property for periods between 10 and 99 years.

UAE has a comprehensive and detailed system for realtors looking to buy property in Dubai. Following are the requirements of taxes and fees that you need to fulfill when buying a property in the UAE:

Property Transfer or Registration Fees:

To protect the interests of buyers and sellers in UAE’s rapidly changing real estate market, specific laws require upfront fees that are distinct from the actual property cost. These charges may vary based on factors such as location and type of property. The fees can range from 2% to 4% of the property value.

Agent Commission or Agency Fees:

If buyers opt to purchase a property with the help of real estate agents, they must cover their commissions. A skilled agent is vital in assisting purchasers make well-informed choices throughout the process.

Security Deposit: 

To secure their purchase until the property transfer is complete, buyers must submit a designated security deposit. Typically, unfurnished properties require a 5% charge for this deposit while furnished ones demand at least 10%, subject to variation dependent on furnishing quality in the specific premise. The broker operating under RERA usually collects this significant amount that may exceed or equalize up to 10% of the entire purchasing cost.

Mortgage Cap or Fees:

While mortgage rates in the UAE are currently favorable for buyers, it’s essential to note that first-time purchasers face a loan-to-value limit of 80 percent known as the “mortgage cap”. As such, new property owners need to make a minimum deposit of 20%, while second-home or more expensive buyers must provide up to 40% upfront. Mortgage expenses are a factor for Dubai real estate buyers who require financing. Such costs typically include mortgage arrangement fees, processing fees, and appraisal charges. In addition to this, obtaining a No Objection Certificate (NOC) is mandatory when registering the mortgage.

Read More: How Much Does It Cost To Build a House In UAE?

Insurance Fees:

Although not obligatory, property buyers in the UAE are strongly advised to consider home insurance as a reliable protection against potential damages. The price for this type of coverage may fluctuate based on the property’s location and desired level of protection. Prospective homeowners should consult with either their community management or developer to ascertain any specific obligations regarding insurance requirements and fees.

Property Service Charges:

Maintenance fees, referred to as property service charges in certain developments or communities are periodic payments obligatory for owners. They go towards the upkeep of communal spaces, facilities, and shared services within that development. The amount payable varies significantly based on the amenities and services provided by said complex. Property owners ought to take cognizance of such expenses and include them when budgeting for ongoing ownership costs.

Tax on Rent:

Firstly, it should be noted that the UAE laws do not mandate property owners or tenants to bear this expense. The issue at hand concerns real estate brokerage fees; specifically, if as an owner of the property you hire a broker they will charge 5% of the rent collected in commission.