Costs of investing in Dubai real estate
Even the most experienced brokers who have studied the Russian market "from top to bottom" may find it difficult to answer an investor's questions about the stages of conducting a transaction in the UAE market, which is new to them. Today we will consider in detail such an important issue as the costs that may face an investor from Russia, who decided to buy real estate in Dubai or other emirates.
The standard costs of the transaction consist of 3 parts:
object value + registration fees + administrative fees.
1. PAYMENT OF THE COST OF THE OBJECT
How much is the cost of real estate in the UAE
The most popular city in the UAE is undoubtedly Dubai. At the moment (10.2023) the average cost of the primary purchase of real estate in Dubai can be divided into the following price categories:
from 15 to 30 million rubles (studios, one-bedrooms)
from 30 to 50 million rubles (studios, one-bedrooms, two-bedrooms)
from 50 to 100 million rubles (two-bedrooms, three-bedrooms, large one-bedrooms)
from 100 to 200 million rubles (3-5 rooms, townhouses, penthouses)
over 200 million rubles (4-7 rooms, villas, premium apartments).
In other emirates (Abu Dhabi, Sharjah, Ajman, Ras-Al-Khaimah, etc.) prices are much lower. For example, in Ajman you can buy an apartment on the first coastline with 2 bedrooms and sea view for 24.1 million rubles.
How to save money when buying real estate in the UAE?
There are several opportunities to reduce the amount of payment:
The price of the object can change at different stages of the sales campaign - developers often apply discounts from 5 to 20% at the stage of pre-launch sales, as well as when selling the last remaining available apartments.
The starting price specified by the developer, usually assumes the availability of installments with minimum first payments of 5 to 20% of the value of the object. When making 50% or 100% of the cost of the lot, the client can most often count on an additional discount of up to 20% - these conditions must be clarified with the manager-representative of the developer before signing the contract.
How is the payment when buying real estate in the UAE?
Payment for the object is made in one of the two currencies of the client's choice: dirhams (AED) or dollars (USD)*.
To pay for real estate from the Russian Federation, the client is recommended to open a currency account in dirhams. On the territory of the Russian Federation such an opportunity is provided by AK Bars Bank and BKS Bank. To make the payment, the client needs to convert the necessary amount from his account in rubles to his account in dirhams and transfer it to the escrow account of the developer.
For non-residents, mortgages and loans for the purchase of real estate are not available, however, most developers provide interest-free installment payment schedule.
* Some developers also provide the option to pay in cryptocurrency (USDT) from the client's portfolio to the developer's account, but if you choose this payment method, you will have to pay a commission of about 2% of the payment amount.
2. MANDATORY PAYMENTS
Registration fees when buying real estate in the UAE
Registration fee (Registration fee or Trustee Fee) is a one-time fee for registration of property with a public notary. The amount depends on the value of the object and ranges from 50,000 to 100,000 rubles + 5% VAT.
Transfer Fee is paid in favor of the Land Department of the Emirate (in Dubai it is Dubai Land Department). The amount of the fee varies depending on the emirate. For example, in Dubai it is 4% of the value of the object, and in Abu Dhabi - 2%. When paying this tax, an administrative fee is paid (from 1000 rubles).
Duty for the issuance of a certificate of ownership is paid in the local court and is approximately 650 rubles.
Builder's administrative fee
This is a one-time payment to the developer upon execution of the sale and purchase agreement (SPA), which includes the collection of documents and pre-sale preparation of apartments by the developer. Usually ranges from 30 000 to 130 000 rubles depending on the developer and the final cost of the purchased object - it is necessary to clarify before booking.
! Some developers offer favorable terms and exempt the buyer from paying administrative and registration fees (e.g. GJ Properties).
3. EXAMPLE OF CALCULATING EXPENSES WHEN BUYING AN APARTMENT IN DUBAI
Here is a calculation of the total amount that a client from the Russian Federation will have to pay when buying a 1-bedroom apartment in Dubai at a cost of 30 million rubles.
The cost of the object 30 million rubles.
Registration fee 50,000 rubles + 2,500 rubles (5% VAT)
Property transfer tax 4% 1.2 million rubles + 1,000 rubles administrative fee.
Duty for issuance of registration certificate 650 rubles.
Administrative fee for developer's services 50,000 rubles.
Total: RUB 31,304,150 + bank commission for converting rubles into dirhams, or commission for conducting a transaction via a cryptocurrency service.
4. EXPENSES FOR REAL ESTATE MAINTENANCE, RESALE AND RENTAL IN THE UAE
Expenses for resale of real estate
Payment of services for re-registration of property. In the case of assignment of the investor will have to pay only the services of the developer, and in the case of the secondary sale of a ready-made object - only the services of a broker (in most cases, a fixed 2% of the agency commission is paid by the buyer).
Registration of NOC (No Objection Certificate). This is a certificate of absence of any debts to the management company (developer) for utilities and other services. Cost from 30 to 130,000 rubles.
No taxes payable. There is no tax on the sale of property. Property transfer tax at the Land Department is paid by the new buyer.
Expenses when renting out the property
Utility payments. The average cost of monthly utility bills is approximately from 10,000 rubles in a studio apartment and largely depends on the use of water and electricity, which are paid by meter.
There is no annual property ownership tax. In the UAE there is an annual maintenance fee (usually 0.25% of the appraised value of the property), but it involves paying for security and maintenance of the house grounds, pool, etc., so it is always included in the utility bills. so it is always included in the utility bills.
There is no tax on renting out the property. You may encounter the concept of a "housing" or "council" levy of 5% of the rent, but this is also automatically included in the utility bills.
5. OPTIONAL EXPENSES
Purchase of airplane tickets. Personal presence in Dubai is required when signing the sale and purchase agreement (SPA), but it is also possible to sign through intermediaries - such as Housebook brokers - and conduct the entire transaction remotely.
Costs of executing a power of attorney. A power of attorney will be required if the client will not be present when the property is received from the developer and/or when the transaction is executed for the resale of the property.
Payment of resident visa. When buying a property with a value of 205,000 USD (approximately 20 million rubles), the client may optionally apply for a resident visa for himself and his family members*. Residency allows you to open a bank account and rent real estate, as well as gives the right to official employment and year-round stay in the country. The cost of registration varies from 65 000 to 130 000 rubles depending on the emirate in which the client buys real estate.
So, investing in real estate in Dubai can be an attractive option for foreign investors, including those from Russia. However, to ensure successful investments, brokers need to thoroughly study the market and take into account possible favorable conditions and risks. It is also important to pay attention to the legal regulations governing real estate investments for foreign investors in Dubai.
To ensure that your clients are assured of a successful transaction, we recommend that you contact reliable brokers who have the necessary knowledge, contacts with developers and experience with real estate in the UAE. In this case you will still receive an agency commission on the sale, but you will not have to take on the responsibility of processing the transaction in an unfamiliar environment.