How easy is it to buy and sell property in Dubai?

Very easy, but the present system for buying and selling property is not one which is likely to be familiar to many global investors. Typically most countries that use Common Law require a lawyer to represent each party or a public official in Civil Law jurisdictions. In Dubai you can buy straight from the developer “off-plan” for little or no fees; alternatively you can buy direct from another private vendor in the secondary market, whether the property has been completed or not. There is an extremely buoyant market as demand currently exceeds supply and you will be able to sell your property in the secondary market before completion or after the property has been built. However many property developers require their consent to sale and purchases, and may also charge a transfer fee.

What Legal costs are incurred when purchasing a property in Dubai?

No, there are no legal costs involved since your contract is direct with the developer. There are only legal costs incurred if you decide to ask a lawyer to act on your behalf.

What is the situation regarding Freehold Title?

Most of the developments are offering freehold properties and your contract confirms this. The law is currently being passed through the courts. However it has not been finalised to date. It is understood that the freehold title announced by H.H. General Sheikh Mohammed bin Rashid Al Maktoum in 2002 shall be freehold as is understood in the international sense - where the owner is considered to have absolute rights to the property.

Is there a formal land registry system?

There is no registration of title being carried out by developers in Dubai yet with the Land Registry. Instead, the property is registered to the purchaser. Once the new land legislation becomes law, then it is expected that the land department will be empowered to register land titles in favour of foreigners for a registration fee of 2% of the purchase price, or valuation, whichever is the higher – usually paid 0.5% by the vendor and 1.5% by the buyer. The Land Registry has now been established, and staff have been allocated to developments in order to cope with the title demands when developments complete.

Can I get a residency visa when I purchase a property?

It is possible to apply for a residency visa when you purchase a property. All visas are sponsored by the property developer and are renewable every 3 years at a cost of approximately 5000AED. You are only able to get a visa for the family if the property which you are purchasing is big enough to house the family comfortably. i.e. 2 bedrooms will only be for adult and 2 children maximum, studio flat will only get a visa for a single person or couple. These visas will only enable you to reside in Dubai, not work here.

How much are maintenance fees?

Maintenance fees for apartments range from 5AED – 15AED per sq ft of your apartment per annum. This will be advised to you at the time of purchase. For villas, the maintenance fees are typically 600 AED – 800 AED per month. They tend to be fixed for 3 years after which a Residents Association is formed.

Can I come and visit the property before I buy?

Of course it is possible to come out and view the property before you purchase. Just remember that developments tend to sell out 18 months before they complete, so it may be that you can only see the area where it is going to be rather than the building itself.

What is the rental yield I can expect?

Currently in Dubai there is a healthy rental market especially to foreigners and rental yields are between 8-12%. Obviously, in time, with all the apartments which will be available to rent, and as capital values rise, yields may drop to somewhere nearer 6-8%. It is worth bearing in mind that currently there is a shortage of property to either rent or to buy to live in and many developments will not be available to live in until the end of 2006. The current building programme is only expected to meet current demand. However, 20 companies a day open up in Dubai and it is anticipated that the population will double by 2010, which will keep demand high for many years to come.

Can you arrange finance for me?

We can introduce you to companies that can assist you in arranging finance in Dubai. Most of the bank’s offer 70% ‘loan to original developer sale price’ mortgages and the rates tend to range from 6 – 8%.

Are there any regulations in respect of building standards?

Yes, 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.

How far will Dubai go in opening up its property market to foreigners?

There is no suggestion of Dubai becoming a completely open market to foreigners in order to protect local nationals. Restricting foreign ownership of property is by no means unique; plenty of other countries worldwide have such restrictive practices and, by these standards, Dubai has an open market. Yet, you should be aware that Dubai restricts foreign property ownership by identifying certain geographical areas in which inward foreign investment may be permitted. This has the effect of restricting the development of land that can be purchased by foreigners to certain areas, and the limited supply actually available to the developers is likely to continue to cause prices to rise. After all, 85% of the population of Dubai are foreigners!

What are the Inheritance Laws in Dubai?

Few people realise that whenever they purchase property outside their original country of residence where they are most likely to have a will, that the property in the country in which they have purchased, is covered only by local laws. Dubai is no different, and the inheritance of property in the UAE is covered under Shariah Law. This stipulates that in the event of a mans' death, property would pass automatically to the eldest son in the family and not necessarily the mans' spouse, even if the property is jointly owned by husband and wife.

Advice from a variety of locally based law firms produces different recommendations, including putting in place a local will in the UAE if you are a resident, or adding a codicil as a supplement to your existing overseas will indicating that any assets you own in the UAE should be covered by laws of the will in the jurisdiction in which it was originally written. Some solicitors have also advised that this will and codicil should then be notarized by the UAE Embassy in the country in which the will was written, in the event that an inheritance dispute ends up in the law courts of Dubai.

Another option is purchasing the property through an offshore or service company in order that the shares of that company may be gifted to your chosen beneficiaries under the terms of your will. In any event, we strongly advise that you talk your own lawyer and a local UAE based lawyer (who we can introduce you to) on purchasing your property.