Dubai’s real estate market is characterized by impressive momentum and steady growth. Buyers and investors are flocking to the market, and demand often exceeds supply. Anyone looking to buy an overseas property in Dubai can benefit from a variety of advantages and achieve high long-term returns. We’ll tell you what to consider when buying overseas real estate and what applies specifically to properties in Dubai.
Are Germans allowed to buy real estate in Dubai?
As a German citizen, you can buy apartments and houses in Dubai. The United Arab Emirates has relaxed its laws in this regard. However, purchasing residential property in the emirate is not possible without restrictions. Foreigners are permitted to buy real estate in Dubai if it is located in so-called “freehold areas.” Additional requirements include official registration and compliance with the legal framework. Furthermore, sufficient equity must be available.
Here’s where Germans can buy real estate in Dubai:
- Business Bay
- Dubai Silicon Oasis
- Palm Jumeirah
- Dubai Sports City
- Arabian Ranches
- Emirates Hills
- Dubai Marina
- Jumeirah Beach Residence
- Downtown Dubai
- Jumeirah Lake Towers
- Dubai International Financial Centre
Anyone who purchases a property in these zones receives full ownership rights and may also rent out the property or resell it to other interested parties. However, only private individuals have this right. Companies from the DACH region are not permitted to purchase foreign real estate in Dubai. Investments through Dubai-based companies are, however, possible. If you have any questions about purchasing real estate and the legal requirements, we’d be happy to advise you. Real estate and law are our core business. You’ll receive reliable and transparent advice and can plan and carry out your real estate transaction with us without having to be there in person.
Buying International Real Estate in Dubai: The Legal Requirements
In Dubai, the purchase of real estate is subject to certain legal requirements. Both local and foreign buyers must comply with these requirements. An important aspect of this is understanding the difference between freehold and leasehold properties.
Freehold Area
In these zones, buyers acquire full ownership rights. This applies not only to the overseas property but also includes the land on which the house was built. This option is particularly attractive to foreign investors, as it guarantees full ownership rights to both the house and the land.
Leasehold Area
Under this arrangement, you can purchase overseas real estate by the sea and obtain the right to use it for a specific period. A 99-year term is standard for leasehold purchases. Ownership of the land is not granted in leasehold areas. Anyone looking to buy an affordable property abroad should take a closer look at this arrangement. Purchases are often more cost-effective than in freehold areas. The rationale behind this is that the United Arab Emirates aims to use leasehold zones to prevent foreign investors from buying up the land permanently.
Anyone wishing to purchase real estate in Dubai must take additional legal considerations into account:
- Dubai Land Department (DLD): All real estate purchases made in Dubai must be registered with the DLD. This is the only way for buyers to officially secure their property rights.
- Sales Contract: A sales contract is required to finalize the transaction. It sets forth all the important terms of the sale, thereby providing transparency and security for both the buyer and the seller.
- Due Diligence: Before purchasing a property abroad, the property and the seller must be thoroughly vetted. This vetting process includes reviewing any existing encumbrances, verifying the title deed, and examining other legal obligations.
The Financial Requirements for Purchasing an Overseas Property in Dubai
Anyone looking to buy an overseas property in Dubai needs to consider more than just the purchase price. Careful financial planning is essential. There are various cost factors to take into account.
Equity
As a general rule, buyers of real estate in Dubai must contribute a large portion of the purchase price as equity. Depending on the type of property and the bank’s terms, this can range from 20 to 50 percent of the property’s value.
Financing Options
Banks in Dubai offer mortgage loans to foreign buyers. However, the terms are generally stricter than those offered to locals. Those who are already residents of Dubai can finance 80 percent of the property’s value and therefore only need to contribute 20 percent as down payment. If a second mortgage is taken out, banks will still provide 60 percent financing even if the first mortgage has not yet been paid off in full, meaning both loans run concurrently.
To clarify: Being a resident means having a resident visa. A sponsor is required for a permanent residence visa. This role is usually filled by the employer, who handles the application for a work visa and also applies for the Emirates ID, a type of identification card.
As a German citizen residing in the Federal Republic of Germany, you must contribute 50 percent equity if the real estate purchase is financed through a bank in the United Arab Emirates.
To obtain a loan from banks in Dubai, a steady and stable income and a good credit rating are required. Those who want to keep their financial burden as low as possible can opt for off-plan properties. Below, we’ll explain in more detail what kind of properties these are. Developers often offer flexible, interest-free payment plans for these properties. However, a down payment of 15 percent of the property’s value is required if you’re interested in purchasing an overseas property in Dubai.
Buying Overseas Real Estate – The Best Neighborhoods in Dubai
Dubai is a metropolis full of contrasts. This is also reflected in the real estate market. Each neighborhood has its own unique character. Which area one prefers is ultimately a personal decision and depends on one’s expectations regarding infrastructure, quality of life, or the nature of the property.
Some of the most popular residential areas in Dubai:
- Dubai Marina
- Palm Jumeirah
- Jumeirah Beach Residence
- Downtown Dubai
Downtown Dubai is centrally located. Anyone looking to buy international real estate from a private seller here will find their new home not far from the famous attractions of Dubai City. The imposing Burj Khalifa is just a short distance away, and the Dubai Mall is also within easy walking distance. Downtown Dubai is also home to the city’s business district. As a result, many property buyers are businesspeople who appreciate the proximity to their workplace.
Dubai Marina has a lively atmosphere. This is where city life and beach life come together. Families and expats in particular feel right at home in the modern residential complexes surrounding the marina. Palm Island makes exclusive living dreams come true. The luxury properties with private beach access are favored by buyers who prefer a quiet living environment and expect a luxurious lifestyle.
Buying Real Estate Abroad—What to Consider Regarding Off-Plan and Existing Properties
If you’re interested in buying international real estate in Dubai, you can choose between an off-plan property and a pre-owned property. Both options have their advantages and disadvantages.
Off-plan property
An off-plan property is not yet ready for occupancy but is still under construction. Investors should note that no rental income can be generated until the property is fully completed. On the other hand, off-plan properties are often available at a lower price than completed properties. They are expected to have high potential for appreciation. To facilitate financing and make them even more attractive to foreign investors, interest-free payment plans are often offered.
Off-plan real estate should be thoroughly researched. The quality of individual developers can vary greatly.
Existing Property
Existing properties are move-in-ready apartments. Investors face no waiting periods. The property can be occupied or rented out immediately, without delay. No speculation is required. No further work is needed on the property. Its condition is known prior to purchase. Existing properties are often less expensive, but they may also require more extensive renovations. Before purchasing, it is advisable to closely examine the building’s structural condition, calculate the potential renovation costs, and weigh them against the purchase price.
Additional Costs and Fees When Buying Real Estate in Dubai
The purchase price has been set. However, there are other costs to factor in.
- DLD Fees: The property buyer must pay four percent of the property value to the Dubai Land Department.
- Real estate agent fees: The real estate agent guides you through the buying process and provides advice and assistance. In return, the agent charges a fee, which for existing homes is typically around two percent of the purchase price.
- Contract Fees: The purchase agreement must be properly drafted and notarized. This will incur additional costs.
- Maintenance Costs: Real estate involves ongoing maintenance costs. These vary depending on the type and location of the property.
Buying an Overseas Property in Dubai—Step by Step
The process of buying real estate in Dubai differs from that in other countries. It is important to understand the individual steps in advance and to follow them carefully throughout the purchase process.
- Real Estate Search (Real Estate Portals, Local Search, Hiring a Real Estate Agent)
- Sales Agreement (Sign the agreement, make a down payment)
- Due Diligence (The property and documents are thoroughly reviewed)
- Financing (arranging financing, talking to banks)
- Purchase Agreement (key points are specified, due dates for remaining payments)
- Registration (Change of Ownership Through Registration with the DLD)
Required Documents
Various documents are required to purchase real estate abroad.
Private buyers:
- Passport (copy)
- Residence Permit
- Proof of Solvency
Corporate buyers:
- Power of Attorney
- Excerpt from the Commercial Register
- Proof of Solvency
Buying Real Estate in Dubai – Checklist
A checklist can be a helpful tool to ensure that the process of buying a property in Dubai goes smoothly and that no important details are overlooked. Take all the details into account and check off important items as you complete them.
- Monitor the market and conduct targeted research (develop an understanding of trends and price fluctuations)
- Discuss financing (review the budget, secure financing through equity or a bank loan)
- Select a location (select based on needs; take infrastructure into account)
- Legal protection (have the purchase agreement reviewed)
- Inspection (Checking the condition and features)
- Contract Execution (Registration with the DLD and Transfer of Ownership)
Take a structured approach to avoid unexpected costs. At Canaletto Sky, we’re happy to guide you through the purchasing process and answer any important questions you may have.
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