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How to buy property in Dubai

Boats in the harbor at the marina walk in view of residential and commercial skyscraper buildings in the Dubai Marina district of Dubai, United Arab Emirates
Dubai's Marina district is one of the city's prime investment spots, where prices have risen 25pc year on year - Christopher Pike/Bloomberg

Have you made money on property in Dubai? We want to hear from you, email money@telegraph.co.uk

From year-round sunshine to no personal income tax or stamp duty, it is understandable why Dubai is a highly attractive market for British property buyers and investors.

A recent investigation by The Times uncovered how British criminals were able to purchase property in Dubai from prison but brokers insist there are now tough anti-money laundering procedures in place and the UAE has taken steps to become more transparent in recent years when it comes to property ownership.

Property prices have also soared since the outbreak of war in Ukraine, when Russian buyers flooded into the city. So just how easy is it to buy property in Dubai?

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There are legitimate ways for UK investors to buy property in Dubai, with investors and homeowners benefiting from capital growth of 17.4pc last year amid a development boom, according to Savills, the estate agency.

The rate of growth is forecast to slow over the course of 2024 to between 4pc and 5.9pc but that is better than the low house price growth or even declines that are expected in the UK. It also compares well to the 2.2pc growth in prices predicted  across the 30 cities covered in the Savills World Cities Prime Residential Index.

Reece Mennie, chief executive of property developer HJ Collection, said: “The market is competitively priced by global standards at $850 per square foot, and the cost of living is relatively low compared with many other urban cities around the world. As such, Dubai’s real estate market presents a great investment opportunity, and it’s expected to remain so in the near future.”

Choose the right broker

Buying a property in Dubai as a UK national isn’t as easy as just finding a home on Rightmove. The market is made up of a mix of off-plan and new-build developments as well as villas and apartments that are only a couple of decades old, unlike the draughty and dated properties that make up the majority of the British housing stock. Most properties are in a master development, built within one community owned by one developer.

You will typically need to work with a property broker or agent to find a suitable home. Some areas may not allow sales to foreign nationals, which is why it is important to use a broker or agent who knows and understands the region.

Recognisable UK property businesses such as Savills, Knight Frank and Sotheby’s International Realty have sales offices in the city, and there will also be local firms.

Real estate agents, brokers and developers have to be licensed by the Real Estate Regulatory Agency (RERA) in Dubai, which regulates the real estate sector. You can search the licensing database on the Dubai Land Department website to check if someone is regulated and follows certain standards.

Chris Whitehead, managing partner at Dubai Sotheby’s International Realty, said: “Choosing the right brokerage is important as some may be full of sales people who only sell what is better for them.

“You need an agent who knows the best location depending on the type of buyer, such as the best places for families or investors.”

A for sale sign sits outside a property on an Emaar Properties PJSC residential development called "Arabian Ranches" in Dubai, United Arab Emirates
Finding a property broker with local knowledge is key to finding a good investment – prices for a four-bedroom house start from £650,000 in some areas - Charles Crowell/Bloomberg

Finding a suitable Dubai property

Once a property broker knows your requirements, you will be invited to view a shortlist.

You should research local prices and check a developer is legitimate and licensed when buying off-plan, which a broker may be able to help with.

Property prices have been increasing but there are still great investment opportunities available, Mr Whitehead said.

Two-bedroom flats typically start from £300,000 or AED1.4m and a four-bedroom house starts from £650,000. A luxury six-bedroom home overlooking a championship golf course would set you back £2m and one in a branded, serviced apartment from £4m.

Properties yield on average a 6pc return and all investment income is tax free, plus there is no stamp duty or inheritance tax payable in Dubai, which are all factors to consider when making an offer.

If you find something you like, you can then make an offer and if accepted, a deposit of 10pc must then be paid by the buyer. This is more stringent than in the UK where an offer can be accepted but nothing is binding until contracts are exchanged.

In Dubai, there are usually some rounds of negotiations before terms are agreed but once the offer is accepted, the buyer could lose their deposit if they pull out of a purchase.

How to finance a Dubai property purchase

Many property buyers in Dubai are “prime” or super-prime customers so may pay in cash. However, it is possible to use a mortgage in Dubai. Jerry Parks, head of real estate at the Dubai branch of law firm Taylor Wessing said this is becoming more common.

Overseas buyers need to apply to a bank in the UAE and some may have restrictions on lending to non-residents. It may be worth getting a visa if you can – if you are working in Dubai it can help secure lower rates.

Non-resident mortgage interest rates range from 6.5pc to 7pc in contrast to the 4.5pc to 5pc interest rates currently offered in the market to UAE residents, said Mr Parks.

You can apply remotely but typically will have to be in Dubai to complete the application and sign the documents to open the accounts.

Parks said: “The ‘know your customer’ process varies from bank to bank, and is largely based on the profile and source of wealth of the individual applying for the loan.

“The process can be quite involved, requiring certified documentation proving identity, address, employment, and income. We recommend clients use a local mortgage broker, licensed by the Dubai Economy & Tourism authority, and regulated by UAE Central Bank.”

Atlantis Royal Residences and resort on the Palm Jumeirah in Dubai, United Arab Emirate
Demand for prime real-estate in areas such as Palm Jumeirah is high, with buyers often making cash purchases - Christopher Pike/Bloomberg

Eligibility requirements vary in the UAE. Mitchell Walsh, chief executive of developer Integritas Property Group, said that most lenders that offer non-resident home loans will check for net earnings of more than £3,000 per month after tax, a good credit report, no existing mortgage in the UAE, that the borrower is aged between 21 and 64 years of age at the time of mortgage application, and has a deposit of 40pc to 50pc.

Documentation required for an application depends on the bank, client profile and country of origin of the buyer. However, it is typical for the lender to require a copy of the buyer’s passport, utility bills, six months of personal bank statements and a credit report to calculate total debt exposure of the applicant.

You don’t need a resident visa to purchase a property in Dubai but once you have bought a property, you may be eligible to apply for an “investor” visa which enables you to reside in the UAE.

There are various categories of investor visa depending on the amount invested by a buyer. The best is a golden visa if you are purchasing a property worth AED2m or above.

A residential construction site beyond an apartment building in the Jumeirah Village Circle district of Dubai, UAE
Many properties are relatively new, so a conveyancing survey isn't as crucial as in the UK - Natalie Naccache/Bloomberg

Conveyancing and surveys

Many brokers offer their own conveyancing process – although this can be done separately – and there are mixed views over whether to get surveys as many properties are still relatively new and are unlikely to have the same legal or structural issues that can come up in UK transactions.

Mr Parks added: “In recent years we have seen more buyers carrying out surveys on properties prior to purchasing. Previously this was not the norm, with most buyers assuming that as the property was recently built it shouldn’t suffer from any major structural issues. The recent storms have underscored the importance of having a professional survey done before you buy.”

While much has been written recently about the attraction of the Dubai property market to those wishing to launder money or hide funds from government authorities, Mr Parks highlights that law firms must adhere to UAE anti-money laundering procedures.

He said: “These require lawyers to obtain certified proof of ID and address, as well as details regarding source of wealth.

“That information is then analysed and a risk rating applied that may require further information before the lawyers can act. International law firms also run all potential client details against worldwide sanctions data to ensure they don’t accept instructions from those identified on those lists. All law firms liaise closely with the Financial Intelligence Unit at UAE Central Bank, reporting any suspicious activity.”

Completion day

Finalising the deal is very different in Dubai. Unlike in the UK where you transfer funds electronically and collect the keys from the agent, the final money transfer in Dubai must be done in-person and by cheque.

This means a non-resident buyer must either have a bank account in the UAE or appoint a trusted adviser who can receive and pay out funds on their behalf.

Mr Parks said UK residents buying in Dubai may put in place a power of attorney notarised by the Dubai courts notary public appointing lawyers to represent them.

He said: “This enables us to sign documentation on the client’s behalf, including the sale and purchase agreement, and to represent the buyer at the completion meeting where the transfer of title takes place and payment is made. Non-resident buyers must be mindful of who they appoint under power of attorney.

“Appointing a law firm to represent the buyer on a transaction ensures that your interests are best protected at all times.”

The buyer also has to pay fees to the property broker, unlike in the UK where the seller pays estate agency fees.

There are set broker charges in Dubai. Buyers typically pay a 2pc agency fee and a 4pc transfer fee. That may sound like a big percentage compared with typical UK estate agency commissions, but remember there is no stamp duty to pay.

Mr Whitehead said the whole process can take around four weeks from making an offer to completion while in the UK it can take closer to four months or more.

He said: “Buying a house in Dubai is as simple as buying a car if you have the right brokerage that looks after you, especially as you could be sending your capital 3,500 miles away from the UK.”