Getting into the real estate market and Buying a property in Dubai or anywhere else for that matter is easily one of the most significant investment decisions most people will make in their lives. It can also be a very exciting time and something a lot of people can get easily carried away with.
So, what should one consider before buying a new property in Dubai? Let’s take a look at the top factors you need to take into account.
Who Lives in Dubai?
As of Q3, 2018 Dubai population number reached 3.1 million; a growth of over 7% from the pervious year. There is no doubt that Dubai is a growing city but who exactly is living here? The short answer is people from all types of cultures and backgrounds. Around 90% are of the total population are expats with about 70% of these being Indian, South Asians, Pakistanis and GCC nationals.
Type of Property Ownership – Freehold vs Leasehold
Newcomers to Dubai’s real estate market often get confused about the difference between freehold and leasehold communities. What do these mean and what do you need to know? Let’s have a look at each in a little more detail.
- Dubai Leasehold Areas
Leasehold communities refers to areas of Dubai where you by buying a property you are basically buying the right to occupy the property for a period of up to 99 years.
- Dubai Freehold Areas
Unlike Leasehold this form of ownership gives the buyer absolute ownership over both, the property and the land it occupies. The property can be altered, sold, leased or occupied at the discretion of the legal owner.
Your Reason For Buying
One of the first and foremost things to consider before buying a property is the purpose. What is the reason you are buying a property? Is it somewhere where you live or is it purely an investment decision. If you are looking for investment, then it’s best to consult with industry professionals as they will know which areas as in demand and delivering the best returns for investors. Attractive areas are usually characterized by high rental value, high capital growth rate, and great infrastructure. On the flip side, if you are looking for a house to live then the decision-making process will look a lot different and comes down to your needs and preferences. Many experts also recommend that potential buyers should first rent where they want to buy to make sure that this in fact is the place they want to live.
For over 20 years now Dubai has been one of the fastest growing cities in the world. It’s tax free environment and a central geographical location makes it a very attractive place to set up and do business. The city is currently witnessing many large-scale infrastructure and real estate projects such as Dubai Creek Harbour, Dubai Hills Estate and Dubai South. With a growing population, increasing business and government spending Dubai is in a great position to continue it’s rapid growth and expansion.
Financing a Property in Dubai
Another important factor to understand and know before buying a property in Dubai is the real estate finance system applicable. Financing services for property buyers is available from banks and companies authorized by the UAE Central Bank. Most home loans in Dubai are offered at an interest rate of around 4 percent and the max loan to value ratio is 75%. In order to get a mortgage, the creditor must check the investors eligibility in order to check his financial capability of servicing the debt. Factors taken into consideration include an applicant’s salary, length of service, employer profile, and a range of others considerations.
Often referred to as one of the most important factors when looking at property is location. Whilst you can change the look and feel of a property it’s location is permanent so you may as well get it right from the start. Some of the main things to consider are:
- Proximity to City or the Sea and other points of Interest
- Accessibility by roads and availability of pubic transport
- Safety and security in the areas
- Commercial activity and infrastructure
- Future projects and development planned
As you can see whilst buying a property can be a very exciting time it’s also something that should not be taken lightly. The above mentioned are just a small number of things to consider in order to ensure that you next property purchase is a successful one.