If you want to invest in real estate in Dubai then you should read this FREE BUYERS GUIDE.

Having researched the market conditions and prospects for growth in the UAE region, especially in Dubai, you would have already gathered that investing in real-estate is a must. It’s the #1 property growth market world-wide in 2013 and will continue to grow at least until 2020 – when Dubai hosts the World Expo (2020). Buying property in Dubai is not as straight forward as most UAE property agents make it out to be. So this guide is a no-nonsense simple 5-point checklist about what you need to consider when taking the decision to buy a property in Dubai. The guide assumes that you are of foreign nationality and not a local Emirati who has certain special rights when purchasing property.

POINT #1: RECOMMENDED LOCATIONS FOR INVESTMENT IN DUBAI

For best capital growth of your investment consider only FREEHOLD properties in the following areas – Dubai Marina, Downtown Dubai, JBR and the Palm Island. At present, keep away from Golf Course developments as these are just marketing gimmicks and developer’s hype. You will not be able to sell these off easily because of the high outdoor golfing temperatures in Dubai.

POINT #2: BUY DUBAI APARTMENT vs VILLA (HOUSE)

This is really up to your taste, but apartments are easier to sell and appear to have better annual capital growth at present.

Apartment prices increased by 2.9% in November 2013 on a month on month basis and were up by 24.5% on an annual basis, the index also showed.

Villa sales prices registered an increase of 0.73% in November 2013 compared to the previous month and were 14.9% higher than in November 2012.

So both apartments and villa do have good capital growth … to be quite honest, better than most parts of the world … which is why you reading this article for re-assurance of your good judgment.

POINT #3: BUY DUBAI OFF-PLAN vs COMPLETED PROPERTY

Since the 2008 bursting of the property boom bubble, in line with the global financial crisis, many investors were hurt badly as the property market fell by more than 60%. So if you bought property in the 2007 peak, then you are in serious trouble, unfortunately and this article cannot help but only offer sympathy.

However, the boom-times have shown strong signs of return to Dubai, and those investors who remain spooked by the 2008 burst bubble, should really not deter new investors with their sorrows. New investors should focus on how best to make money from the property market resurgence in Dubai without fear from the bad-taste of ill advice of those that got greedy in the past, and don’t want new investors to profit now.

Dubai is the #1 property growth market for 2013 … just google it … 23% growth last year. My research indicates that Hong Kong, then Singapore and some parts of Europe follow in the distance.

So the main question is what type of property should you be investing in and why (Off-plan, Ready Built, upmarket, low-cost)? It all depends on what your budget permits and what are your intentions for utilizing the investment. The trends listed below should provide you with some assistance:-

Off-plan (recommended investment – Hotel Rental Pool Apartments)

• The trends most investors favor today is in off-plan developments that, on project completion, offer the investors complete use of the property for permanent use WITH the option to subscribe to a rental pool facility whenever you are abroad. This type of property maximizes your investment returns and will ensure that you get the best capital appreciation for years to come – as this type of property will be consistently in high demand.
• The rental pool (serviced apartments) in hotel complexes are the best investments in today’s Dubai property market. This is really an attractive investment since it allows you to use the property whenever you are in Dubai and earn rental pool income from the hotel operator whenever you are away (which is generally most of the time). The hotel operator maintains your investment to 5-star standards and pays you a portion of the room rate based on occupancy and costs to manage. The typical ROI is around 17% p.a. of your capital investment – this coupled with the annual capital growth estimated conservatively at 15% p.a. will yield you net 32% p.a. growth. Now compare that to any other type of property investment … even at 25% p.a. return, you will payback your property within 4 years.
• The main attraction to this type of investment is that you don’t outlay all your cash at once, which is what you would do for ready/completed properties. Off-plan property investments allow you to spread your cash over a number of months/years so that you can even sell-off your investment before you actually take handover. If you choose to profit from the definite property boom set for Dubai, at least from now until 2020 then your best bet is buying into hotel apartment projects that have already commenced and is showing clear signs of completing by at least 2017. This will give you enough time to profit from a sale before project completion to allow the next buyer an opportunity to also profit from the years remaining (2017 until 2020).

• Since the demand for hotel-apartment type accommodation has outgrown current supply, the prospects for profiteering from these types of investments are obvious.

• This is a good investment because you get to inspect the property before you buy.
• The downside is that it’s expensive, more than off-plan, and you need to be sure about its intended use. If it’s your holiday home, you need to be sure about how you are going to earn income from it whenever you are away. Who will maintain it, and manage tenants, etc.
• The traditional home buyer prefers this type of investment. However trends in Dubai are such that most of the ready-apartments/villas are not configured for rental-pool managed system. Those projects are largely still under construction and are sought after investments.
• The decision to buy traditional ready/completed property, without rental pool options, must be based on your very specific need, for example, you are either migrating to Dubai – new job, business, etc. or you are extremely wealthy and prefer not to earn income when the property is not in use.

• My advice is to stay away from this type of investment. The prices are low and appear attractive, but it’s not for serious investors in Dubai. One should really leave low cost housing investments to the governments of the country to sort out as per their obligation to the economy of the land they want to manage.

• The main concern here is that the capital appreciation is not as great as what you would get from up-market properties. You cannot use it for personal / holiday letting because these properties are usually based in the less attractive parts of the city with no views, and social attractions. It’s really intended as living quarters for migrant semi-skilled workers who at times share a single room amongst 4 – 6 people illegally.
• Many agents claim they can manage the tenants but these are really migrant workers who come in/out of Dubai often. So expect your investment to decay over time and it will require you to re-capitalize the property every 5 years or so.

• My advice stay away, unless you are an expert in maneuvering in this market with the local cut-throat agents.

POINT #4: BUY FROM DEVELOPER or PRIVATE SELLER

This is the other question that comes up often? Dubai has no capital gains tax. The transfer taxes paid to the Dubai Land Department is the same (4%) whether you buy from developer or a private seller. Generally private sellers of OFF-PLAN projects are much cheaper than buying from the developer. The reason for this is that the private seller has purchased early in the development, waited for the developer to progress with the construction and increase their prices along the way. The private seller is then able to offer the property in the same project for much less than the developer’s prices. This is called FLIPPING properties in Dubai.

Late last year (2013), it appeared the Government tried to curb FLIPPING of properties by increasing the property transfer duties from 2% to 4%. They originally intended to keep the taxes at 2% if you bought from the developer. However, the taxes at present are set at 4% irrespective of who you bought from. The developers obviously do not like this and have actually banned some property agents from bulk buying properties from them at project inception and then underpricing the developers later in the project.  However this ban does not apply to the private seller.

I recommend first find a private seller wanting to FLIP a property that is still OFF-PLAN and then compare the price to the developer’s market pricing and negotiate with the PRIVATE SELLER. It’s easier to negotiate with the private sellers than with the developers, simply because the developers are large corporations and have targeted price increases as the project reaches completion.

POINT #5: BUY THROUGH AGENT or DIRECT FROM PRIVATE SELLER

The typical agent’s commission in Dubai at present is 2% the purchase price. It may be included in the price or the agent will add it on at contract signing stage. So you need to clear this up whilst you are prospecting.   There are pros and cons to buying either through an agent or private seller. See below.

• Agent
• Make sure the agent is RERA approved by the Dubai Land department
• Agents add 2% commission to the transaction
• They do provide some level of security to the deposit you make when the sale transactions commence
• They help you each step of the way.
• Private Seller
• The 2% agents fee is not included, meaning the property price is cheaper
• There is a risk to your deposit, however the laws in Dubai do not favor dubious property sellers and can be harsh if you are fraudulently sold bogus property.
• However, you need to ensure that the purchase/sale agreement is a formal, simple and easy to understand document.
• If you buying an off-plan property from a private seller (direct or via the agent), you with will need to obtain the NOC (No objection Certificate) from the developer, prior to paying any deposit to the SELLER. This is a common but important stage in the process because you need proof that the SELLER is the rightful owner of the property and that the developer has no objection for SELLER to on-sell the off plan property to you. The standard practice is that both you and the SELLER (or the SELLERs power of attorney) both signs the application for the NOC at the developer’s offices.

So in summary, as long as you are buying off-plan property, it’s safe to do so either via an agent or direct from the private seller, because the controls to protect you are at the developers offices by means of the application and issuance of the NOC certificate. The agent involvement adds an additional 2% cost to you, if you need added piece of mind.

If you are buying a completed property from a private seller, it is recommended that you pay the additional 2% agents fee or negotiate it lower, but use a RERA approved agent because there is no developer involved and you will be outlaying the full purchase price of the property – so take extreme care when purchasing completed property.

CONCLUSION & RECOMMENDATION

The author has researched and successfully invested in Dubai’s property market over a number of years and for further advice you are welcome to contact the author at

It is the author’s recommendation that current trends are to buy into off-plan rental pool type hotel apartments at this stage in Dubai’s property boom cycle as it shows the best overall return on investment and hassle-free maintenance of your property. Do not waste time with low-cost housing investments and really only focus on upmarket prime property investments in Dubai. The indicators forecast a 12 – 15% growth for 2014 and if you can buy direct from PRIVATE SELLERS flipping OFF-PLAN investments below the Developers current market prices, then this is first prize opportunities not to be missed.

GOOD LUCK AND HAPPY PROSPECTING IN DUBAI