Dubai is one of those cities where people enjoy a lavish lifestyle. With a stable economy, consistent technology advancements, and so much development happening, it is one of the best property markets to invest your money in. People who have an interest in the real estate industry should consider the pros and cons of buying property in Dubai.
Since the Dubai real estate market is growing day by day, people who have the financial means to do so can’t say no. Not only the UAE nationals, ex-pat residents, and non-resident foreign investors are also showing a lot of interest in buying property in Dubai.
It doesn’t matter whichever country you belong to Canada, UK, Hong Kong, India, etc, the property market of Dubai is open for all.
If you are also considering investing in the Dubai Real Estate Market, it is good to check out the pros and cons of your investment. So, let’s explore these to help you make a sound investment decision that promises good returns, security, and much more.
Pros of Real Estate Investment in Dubai
Constant Development & High-Class Infrastructure
Dubai is soon becoming the World’s smartest city by incorporating constant development and innovation in its infrastructure. There is always some development or improvement work happening in the city.
The residential and commercial real estate market is using a combination of innovation, technology, and social responsibility to offer an amazing infrastructure to society.
Real estate developers are introducing smart and innovative technologies within villas and apartments to improve the quality of life and provide additional comforts for the community.
This is one reason property investors prefer Dubai because they can already see high chances of potential growth in its real estate sector.
High Return on Investment
As Dubai’s population is increasing, the real estate market is also witnessing significant growth. According to research, the residential property rates have increased by up to 5.4 percent in 2021 in Dubai and this isn’t going to stop. So, investing in a property in Dubai can assure you of promising returns in the future.
If you are living in the city and paying a heavy amount of rent every year, you must consider the pros and cons of buying property in Dubai. This is the right time to take the step.
No Property Taxes
Do you know how high the property tax is in Dubai? Well, there is none! After purchasing a property, you only need to pay the registration fee to the Dubai Land Department. There’s no other tax levied on investors, no matter if they are native or foreigners.
Hence, if you buy property in Dubai, you don’t need to pay any taxes to the government like in other cities, such as Texas, London, New York, Hong Kong, etc.
If you want to live in Dubai and settle down with your family, the Emirate of Dubai is one of the safest places for you. It boasts of a healthy environment which is ideal for families who want to raise their children in a secure area.
Using the online AI Ameen Service and Smart Police Stations, the city ensures to keep its UAE citizens safe. People can report crime anonymously with no fear of attack.
The emirate is pretty strict in enforcing the law. They are efficient in tracking crime using their latest smart solutions. So, there are hardly any cases of theft reported, and minor indifferences are solved peacefully.
Overall, this is another best reason for making an ideal property investment in Dubai.
If you are buying real estate property worth AED 1 million, you are eligible for applying for an investor visa or a residency visa in Dubai. Although, you need to prove that the property you are purchasing is not under a mortgage or off-plan.
Then, submit a copy of your passport and title deed to the Dubai Economic Department and they will provide you trade permission, if allowed by the Dubai Land Department. Upon receiving this, you can visit the Immigration office to apply for a two-year residency visa.
You can even apply for a 5-year long-term residence permit if you are investing in a property worth AED 5 million. And the best part is that your family members can join you along.
Cons of Real Estate Investment in Dubai
Innumerable Fresh Developments
After the real estate boom in Dubai, there is an oversupply of properties, such as villas, apartments, and townhouses. The market saw a supply of nearly 1 million residential units at the end of the last year.
Owing to this, the supply is higher than the demand for fresh developments. Hence, a short-term fall in the performance of the real estate sector can be expected.
Initial Purchase and Costing
When you purchase property in Dubai, not only does the property value, but you also need to pay additional costs as well.
Some mandatory payments are required by the Dubai Land Department if you buy property directly from the developers. This includes the DLD charge (4% of the land value), Title Deed Issuance Fee, and Administration fee- all payments have to be made in advance.
Buyers who are taking a mortgage have to pay the mortgage fees to the Dubai Land Department. The fee is 0.25 percent of the mortgage amount. So, borrowers who opt for this have to pay a little more than those who pay with cash.
Difficulty in Obtaining Mortgage
If you want to apply for a mortgage for your property investment, you need the help of a bank. Banks usually ask for a valid ID and proof of your income, such as salary slip, assets, or self-employed income. This helps them to consider your eligibility for getting the loan.
Then, you need to pay the mortgage registration fee to the bank and apply for your desired amount. Getting a mortgage can be prolonged and complicated at times.
Additionally, there are a lot of formalities involved. In case you already have a mortgage on the property, you need to agree on the terms of the bank before forwarding your NOC application. This can be risky for the buyer and the loan sanction can be difficult. Also, you need to choose the financial institution carefully.
Lack of Freedom
In Dubai, there is a lack of democracy. Laws can change immediately with no prior notice or government elections. The UAE citizens have to abide by these laws enforced by the government to live in the city peacefully. While people who don’t follow the rules and guidelines have to face stringent actions and punishments.
No UAE Citizenship
It doesn’t matter if you own property of high value or low value in Dubai, you cannot claim UAE citizenship. The maximum benefit you can get is a long-term residency visa if you spend AED 5 million in purchasing real estate property.
So, this means you need to renew your visa to continue living in the city. If you cannot renew for whatever reason, you will be asked to leave the city. The strict and stern policies fixed by the government won’t allow you to continue living without a valid permit.
Is Buying Property in Dubai a Good Investment?
Yes! Buying a property in Dubai is definitely an excellent investment opportunity for you. It will prove to be a worthy decision in the upcoming years. The high rental yields and the rapid growth of the city are two factors that you can never ignore as investors.
Keeping the drawbacks aside, the city is emerging fast to be the smartest city in the world. Owing to its stable economy, it is also going to attract more spotlight in the future.
If you are planning to go ahead with Dubai property investment, getting the help of real estate advisory firms is a wise decision. The real estate agents can help you explore sound investment opportunities in Dubai.
Allegiance is a reputed Real estate advisory company that has helped numerous clients across the world in making sound investment decisions in the city. You can consult our experts not only to get their support in finding the right property for your needs but also to consider the pros and cons of buying property in Dubai.