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Buying a property can, even at the best of times, be a daunting process. So before you start the hunt for your perfect home or investment property, use our Buyers’ Guide to equip yourself with the basic knowledge and tools to take the first step in owning or investing in a property.
Any investor, overseas or resident, can purchase in Dubai’s luxury property developments.
In general, the Dubai Government issues residence visas to new property-owners and their immediate family. These will need to be renewed every three years as per the latest immigration regulations.
Buyers do not need a local bank account to arrange purchases, though these can easily be arranged through Oryx banking partners.
Freehold is available on most of the developments Oryx Corporation handles. In some cases there is a mixture of freehold and 99-year leasehold property.
Property in prime locations of Dubai will always be in demand and are likely to provide excellent investment opportunities in the long term. The projects in vogue today are The Palm Jumeirah, The Palm Jebel Ali, the Dubai Marina area (Oryx Marina, MarinaScape, Bayside Residence), Dubailand (The Villa, Wadi Walk, Victory Heights) and Pentomimium.
As a result of the rapid developments in the Dubai real estate market over the last several years, banks have aggressively expanded the mortgage market. Mortgages are available on a 10 to 25-year basis through Oryx Corporation’s preferred financing partner, Gulf Lenders Network. Interest rates vary from introductory/fixed term offers from 6.40 per cent per annum, up to rates in excess of 9.50 per cent.
In general, a deposit representing 10% of the buying price is required at the contract-signing stage for all new development properties. This is followed by what are known as stage payments that are made at regular intervals through to completion.
Completed property needs to be paid in full (100%). The developer will charge a 1-2% transfer fee to put the property contract into your name and the contract will follow in about two weeks. Each developer will offer a different payment plan so it is best to contact us for project-specific details.
There are currently no government taxes of any kind when purchasing a property in Dubai. Nor is there a capital gains tax. When the Dubai Lands Department registers the property title, buyers must pay a 1.5% tax based on the purchase price of the property. If the property is purchased with a mortgage, buyers will pay 0.25% of the value of the loan.
Unlike the UK, US and Canada, Dubai currently does not have legislation in place regarding minimum disclosure requirements by developers to purchasers who buy a property ‘off plan’, nor are there any statutory protection for purchasers whose houses or apartments do not conform to the initial plans of the developer or representations of the seller or the seller’s agent.
Developers’ obligations to complete and handover property on time are dealt with contractually under the sale and purchase agreement (or as applicable, the lease agreement). If the property is not yet constructed, the agreement will typically provide an estimated handover date and usually the agreement will allow the developer a fair bit of latitude in terms of extending the date. As in many other regions, purchasers must be prepared to anticipate possible delays when awaiting possession of a property under construction.
Warranties covering defects in property are dealt with contractually, but it is common in Dubai for developers to repair general defects for a one-year period. There are codes of standards applied by the Dubai Municipality regarding building permits and contractual clauses. The developer will have to maintain the standards as stipulated in the regulations issued with regards to building construction, and also safety issues. In the event of a problem, assistance can be found from the contract entered into with the developer. This may contain building covenants, which often provide a guarantee of workmanship of 10 years. There is also the civil code of the UAE, which contains protection regarding building standards. Under the Civil Code, building engineers and consultants are liable for structural defects to a building for a period of 10 years.
Service Charges are levied in order to maintain the various common areas and facilities of the community or the building and to generally ensure these are properly managed and administered. In many of the new property developments and residential buildings throughout Dubai, service charges are levied on the owners by the co-owners associations, and collected by a manager appointed on behalf of the associations. In a lease situation, these charges will generally be paid to the landlord. Services charges throughout Dubai vary widely, depending on the area and sophistication of the property in question. Larger community developments also charge their property owners an annual community charge, normally paid to the master developer of the project.
If a property has been registered with the Dubai Land Department then there would be an outright sale or transfer that would involve changing the registration into the name of the new owner – much the same way sales transactions are done in other parts of the world.
Prices in Dubai have experienced considerable growth, and are forecast to remain this way for some time. This can be clearly seen if comparing current prices with those of 6 months ago. Like all investments, however, property prices can go down as well as up. Talk to your Oryx Corporation Property Sales Consultant for project specific information.
Currently in Dubai there is a healthy rental market especially to foreigners and rental yields are between 12-15 percent, depending on the location. Obviously, in time, when all the apartments under construction come to market, and as capital values rise, yields may drop to somewhere nearer 10-12 percent. It is anticipated that the population will double by 2010, which will keep demand high for many years to come.
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