Buying Property in the UAE as a Nonresident
Buying property in the United Arab Emirates as a nonresident can seem daunting. Thankfully, a number of things can simplify the process. Because of this, thousands of nonresidents buy property in the UAE every year. These foreign investors come for many reasons: rental properties, personal homes, vacation homes, and tax-free capital gains.
While there have been fluctuations in the UAE market, the property market in Dubai is the most transparent and well-regulated in the region. The UAE has continued to prioritize improving its property market, even introducing new legislation to do so. These legislative changes have made the market more accessible to nonresidents in addition to creating exciting investment opportunities.
It is important to know where the law currently allows nonresidents to purchase property. Dubai law allows nonresidents to buy leasehold property. Freehold property can be bought in 23 areas, including the Dubai Marina, Palm Jebel Ali, and Emirates Hills. On the other hand, Abu Dhabi allows nonresidents to buy leasehold and freehold properties in specific investment areas, such as Yas Island, Raha Beach, and Saadiyat Island. Most property available for nonresidents in the Northern Emirates is leasehold, but both lease and freehold properties can be purchased in Umm al Quwain, Sharjah, Ras Al Khaimah, and Ajman.
It is possible for nonresidents to secure mortgages through UAE banks, but some notable restrictions apply. Nonresidents are required by law to have at least 25 percent as a down payment in cash, as opposed to 20 percent for nationals. On top of this are the various purchase costs. For properties costing AED 5 million or more, this will be 35 percent for nonresidents. After your first property, you will need 40 percent of the loan as a down payment for any future purchases.
Make sure to discuss your plans with a mortgage or financial advisor, as they can help you understand the various regulations you will encounter in securing a loan and purchasing a property. They will also be able to advise you on what loan types best suit your needs (largely determined by your plans for the property) and how to negotiate options with lenders. Some lenders allow various fees and charges to be integrated into the total loan amount, while others do not. Small differences like these can actually be quite consequential over the life of a loan, so be sure not to overlook them.