How to buy a flat in Dubai: the laws and regulations to be aware of

Dubai is one of the most attractive destinations for real estate investors worldwide. With its favorable tax framework, modern infrastructure, and booming real estate market, the city offers unique opportunities. However, to successfully invest in Dubai, it’s essential to understand local laws and regulations. This detailed guide guides you through each step of buying an apartment in Dubai and sheds light on the essential legal and administrative aspects.

Why invest in an apartment in Dubai?

A booming real estate market

Dubai has established itself as a hub for business and commerce, attracting thousands of expatriates and tourists each year. This constant influx creates a strong demand for housing, boosting the real estate market. By 2024, new high-end residential projects and modern infrastructure will enhance the city’s appeal.

Favorable taxation

Unlike many major cities, Dubai does not levy tax on rental income or property. This means investors can maximize their returns without being burdened by excessive taxation. This, combined with competitive acquisition costs, makes Dubai a compelling destination for investors looking to diversify their portfolios.

High rental yields

Rental yields in Dubai are among the best in the world, ranging from 6% to 10% depending on the neighborhood and property type. This profitability is fueled by a steady demand for quality housing, particularly in prime areas such as Downtown Dubai, Dubai Marina, and Business Bay.

To discover investment opportunities in Dubai, check out this article on reasons to invest in real estate in Dubai .

Laws governing the purchase of an apartment in Dubai

1. Areas accessible to foreign investors

Since 2002, foreigners have been able to purchase real estate in Dubai, but only in government-designated areas called freehold zones . These areas include prestigious neighborhoods such as:

• Downtown Dubai : A vibrant city center with modern residences and iconic attractions like the Burj Khalifa.
• Palm Jumeirah : A luxurious man-made island offering stunning views and high-end properties.
• Dubai Marina : Ideal for expats, with its modern skyscrapers and marina views.
• Business Bay : A booming business district, perfect for rental investment.

These zones offer foreign investors the opportunity to own real estate without a time limit, a unique advantage in the region.

2. Freehold vs Leasehold

In Dubai, there are two types of property rights for buyers:

• Freehold : Allows investors to own the property and land permanently. This gives investors complete control over the property, including the ability to rent or resell it at any time.
• Leasehold (usufruct) : Allows you to own the property for a fixed period of time, usually between 30 and 99 years, but without rights to the land. This type of ownership is more common in neighborhoods where the government or public companies own the land.

Before investing, it is crucial to check what type of property applies to the desired property to avoid any unpleasant surprises.

3. Registration of ownership

All real estate must be registered with the Dubai Land Department (DLD) , the official body responsible for regulating the real estate market. This registration is mandatory to formalize the transaction and protect the buyer’s property rights.

Registration fees

Registration fees are set at 4% of the purchase price . These fees cover the formalization of the transaction and securing the owner’s rights. They must be paid at the time of registration, usually shared between the buyer and the seller (depending on negotiations).

4. Secure payments via trust accounts

To ensure the security of real estate transactions, the DLD requires that all payments for the purchase of new properties be made through secure trust accounts . These accounts, managed by approved institutions, ensure that the buyer’s funds will only be used after the developer has fully delivered the project.

Administrative procedures for buying an apartment

1. Search and selection of the property

The first step is to determine your investment objectives: are you looking for a property for personal use or to generate rental income? Once your criteria are defined, it’s advisable to work with a local real estate agency. For example, We Are Human Agency offers a selection of apartments suited to various needs and budgets.

2. Signing of a Memorandum of Understanding (MOU)

Once the property has been chosen, the buyer and seller sign a Memorandum of Understanding (MOU), which formalizes the terms of the sale. At this stage, the buyer typically pays a deposit of 10% of the total price.

3. Final payment and transfer of ownership

After finalizing the agreement, the buyer transfers the remaining balance to an escrow account. Once the payment is complete, the DLD registers the property in the buyer’s name, thus formalizing the transaction.

The investor visa: an additional advantage

Purchasing a property in Dubai worth at least AED 750,000 (approximately €185,000) qualifies for an investor visa , allowing the buyer and their family to legally reside in the Emirates.

Types of visas

• 3-year visa : For goods with a minimum value of AED 750,000.
• 5-year visa : For real estate investments exceeding AED 5 million.
• 10-year visa : For investments above AED 10 million.

This visa is a significant advantage, as it makes it easier to open local bank accounts, obtain driving licenses and access various services in the Emirates.

Additional costs to be expected

In addition to the purchase price, buyers should plan for certain additional costs, including:

1. Real estate agency fees : Approximately 2% of the sale price.
2. Registration fees : Set at 4% of the purchase price.
3. Maintenance fees : Mandatory for all owners, these fees cover the upkeep of common areas and vary depending on the project.

Mistakes to avoid

1. Ignoring legal checks : Make sure the seller is authorized to transfer the property and that all documents are in order.
2. Underestimate additional costs : Don’t neglect additional costs, which can represent a significant portion of the total budget.
3. Not working with a trusted agency : Working with local experts, like We Are Human Agency , ensures a secure and worry-free transaction.

Conclusion

Buying an apartment in Dubai is a unique opportunity for investors, but it requires a thorough understanding of local laws and regulations. From areas accessible to foreigners to registration rules, secure payments, and investor visas, every step is carefully planned to ensure a transparent and reliable transaction. With the guidance of an experienced real estate agency like We Are Human Agency , you can navigate the process with confidence and make the most of your investment in one of the world’s most dynamic cities.