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How to Buy a Property in Dubai: Tips to Follow

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Buying property in a city like Dubai can evoke mixed emotions in many people. While the sheer excitement of owning a home is palpable, young first-time buyers find it challenging to navigate the maze before they can get the keys to their dream homes. Overcoming the seemingly complex legal and financial hurdles associated with real estate investments often takes a severe emotional toll on most buyers.

If you have been daunted by any of these issues and thus putting off your property investment, do not fret. This article will guide you to make informed decisions and become the proud owner of a grand home in Dubai. Learn everything about the property purchase process to make this experience smooth, safe, and joyful.

How to Buy a Property in Dubai?

Whether you want a home to move into or a property to invest in, Dubai fits the bill perfectly and offers you a plethora of options. The general guidelines for buying a property in Dubai are as follows:

Affordability :

Take stock of your financial position to determine what you can afford to invest. Although you can borrow to supplement your savings, take care to ensure that the burden of repaying the loan does not upset your family’s budget

Research :

Start researching the Dubai realty market to understand the housing options, amenities, locations, etc. that fit your budget. Check whether you can wait for a couple of years on a new project or if you want a readymade home. You can also engage a real estate agent for professional guidance.

Financing Options :

Get in touch with banks and housing finance companies to explore mortgage financing options. Check their eligibility criteria and keep the documents handy (to apply for a loan)

Legal Restrictions :

There are certain restrictions applicable to foreign nationals regarding property ownership. These restrictions typically depend upon the nationality of buyers and the type of property. Buyers have to check these restrictions before they begin their property search.

Booking the Property :

After identifying a suitable property, you may have to make an advance payment to reserve the house. This advance is generally refunded if the deal does not materialize.

Sale Agreement :

The sale agreement is a legal contract between the buyer and the seller for transferring the ownership of the property. Please check the terms and conditions of the sale. Consult a property lawyer to ensure a smooth and seamless process of transfer.

Property Registration :

After the transfer of ownership, the property has to be registered with the Dubai Land Department (DLD). The DLD then issues the title deed (known as Mulkiya) to the buyer. The buyer now becomes the legal owner of the property.

Law for Buying a Property in Dubai

Property investments in Dubai are regulated by the 'Real Estate Law No. 7 of 2006: Land Registration Law'. According to Article 4 of this law, any citizen of the UAE or GCC countries can purchase properties anywhere in Dubai.

However, foreign nationals can purchase properties only in those areas that are designated for foreign property ownership. These properties can be bought either on a leasehold basis (restricted property rights) or a freehold basis (complete ownership of the property).

List of Tips to Buy a Property in Dubai

Investment in Dubai real estate is highly lucrative for property buyers. However, it is essential to tread with caution and make an informed decision in this regard. Here are some useful tips for the benefit of investors.

Study the market dynamics :

Prospective property buyers have to understand the current trends, price fluctuations, and prospects of Dubai’s real estate sector before they take a plunge. Reading the research reports of top consulting and realty firms provides a deep insight into the market.

Draw a feasible budget :

Analyze your family income, assets, liabilities, and future financial requirements to determine the budget for your home. Apart from the purchase price, there are other costs, such as registration fees, legal fees, agent’s commission, and monthly maintenance charges.

Location is very important :

The property should be located closer to workplaces, schools, hospitals, entertainment, and shopping centers. It should be well-connected to other parts of the city. If the property is located in the suburbs, it should have an immense scope for development.

Select a good agent :

Dubai has numerous real estate agents to assist property buyers. Please select the right agent or firm based on online reviews, testimonials, or word-of-mouth recommendations.

Check out the property :

A physical inspection of the property is imperative to get first-hand information on its quality, legality, and other vital aspects. Hiring professionals for inspection is a good decision.

Understand the laws & regulations :

Property is a big-ticket investment with serious financial consequences. Investors, especially foreign nationals, should make extra efforts to ensure that they are not violating any law. The paperwork should be in proper order to avoid legal hassles in the future.

Know the developer :

The developer’s reputation, track record of delivery, and financial position are crucial factors to consider before you decide to associate with them. Do not be swayed by their promises, aggressive marketing, and outreach.

Be a good negotiator :

As much as you want to buy a property, the seller is also keen to dispose of it. The developer may offer attractive discounts if you can get some of your friends or relatives to invest in the same project. Do not hesitate to walk away if the terms of the deal are unreasonable.

Have a long-term perspective :

Whether you are buying the property for self-use or investment, you have to evaluate its long-term prospects. Making short-term investment bets without applying much thought can prove to be very costly in the long run.

What are the Legal Steps to Follow in Dubai to Purchase a Property?

To safeguard their investments, buyers have to be well-versed in the legalities involved in purchasing a property. The legal steps for purchasing a property in Dubai are as follows:

1. Finding the Right Property and Negotiating With the Seller

You can search for properties online or hire a good real estate agent to show you homes that meet your requirements. Once you have zeroed in on the right property, the next step is to negotiate the terms & conditions of the sale with the builder/seller. 

Buyers can either make a full payment from their resources or opt for mortgage financing. Builders typically offer attractive discounts if you make a spot booking with full payment. Buyers need to ensure that there are no misunderstandings or ambiguities regarding the property, price, payment mode, and other aspects.

2. Drafting and Signing the Sale Agreement

The next step for the buyer is to sign an agreement of sale or a memorandum of understanding (MOU) by using Form F, a RERA Dubai real estate firm. This is available on the website of the Dubai Land Department. Buyers can take the support of their lawyers or real estate agents to fill out this form.

Both the buyer and the seller are required to sign the contract in front of a witness at the registration office. Further, the buyer has to pay a 10% security deposit to the registration trustee. This amount will be returned to the buyer after the property transfer is completed.

3. Applying for a No Objection Certificate (NOC)

The buyer has to apply for and obtain a no-objection certificate from the builder for transferring the property ownership from the seller to his/her name. The builder issues the NOC only if there are no outstanding dues and charges on the said property. The buyer and the seller can meet at the builder’s office at a convenient time to get the NOC.

4. Completing the Property Transfer Process

After obtaining the NOC from the builder, the buyer and the seller have to meet again at the Dubai Land Department office (DLD). The seller effectively transfers the ownership of the property to the buyer by completing the requisite formalities. The prescribed transfer fees and administrative fees have to be paid to the DLD. A new title deed shall be issued to the buyer by the DLD.

Things to Consider While Buying a Property in Dubai

Potential buyers have to consider the following factors while buying a property in Dubai:

Budget :

Determine the amount that you can afford to invest in a property. Apart from the purchase price, there are other costs such as registration fees, legal fees, agent’s fees, maintenance charges, etc.

Location :

The property’s location is a critical factor. It should be close to your workplace and other facilities such as schools, hospitals, shopping, and entertainment. The locality should have good potential for future growth and development.

Type of Property :

There are different property types, such as apartments, villas, row houses, etc. Select a suitable one based on your budget, family size, and other requirements.

Amenities :

Several amenities in a housing project, such as a gym, swimming pool, sports facilities, salon, power backup, and round-the-clock security, can enhance the quality of lives of the residents and increase the property’s value

Builder's Reputation :

The property developer must enjoy a solid reputation in the market with an excellent track record of delivering high-quality projects on time. The builder should also have a strong balance sheet.

Funding the Purchase :

Home buyers need not despair if they are short of resources. Banks and financial institutions offer big-ticket loans for long tenures at attractive interest rates (for eligible borrowers)

Legal Aspects :

Every prospective buyer has to know the rules and regulations governing the purchase of property. Several countries, including the UAE, impose certain restrictions on foreign nationals buying properties.

Returns :

The property chosen must have very good resale potential in the medium to long-term duration. This depends on many factors, such as brand, location, quality of construction, amenities, and overall development of the locality.

Professional Support :

It is highly beneficial for foreigners and first-time home buyers to consult professionals such as financial advisors, real estate agents, and property lawyers. These professionals can provide specific advice to buyers based on their requirements and guide them through the entire property purchase process.

The Importance of Property Insurance

Property Insurance is a type of insurance policy that protects your property against loss or damage due to natural calamities, theft, fire, explosion, vandalism, riots, and other accidents. Homeowners can purchase property insurance by paying a nominal premium every year. Buying adequate property insurance is important on account of the following reasons:

The policy offers financial protection and compensates homeowners against unforeseen events that cause damage to their properties.

Property insurance is an excellent risk management tool to safeguard the interests of homeowners and alleviate their financial burden. It covers the cost of repairs, renovation, and rebuilding after damage.

Several banks and financial institutions make it mandatory for their borrowers to get property insurance coverage while disbursing home loans.

Property insurance also provides liability coverage to protect homeowners against third-party claims. Such legal claims may arise if any person is injured on your premises or any accident in your house results in a loss to your neighbor(s)

Homeowners have peace of mind when they know that their properties are fully covered against potential losses.

Frequently Asked Questions on Tips to Buy a Property in Dubai

Yes. The UAE laws allow resident and non-resident foreigners to purchase properties in designated freehold areas such as Downtown Dubai, Palm Jumeira, Dubai Marina, etc. The DLD updates this list every year. Further, there are other rules and restrictions applicable to foreign property ownership.

The exact timeframe to purchase a property may vary based on several factors, such as the property type, payment mode, time of the year, and so on. However, the process is generally completed within four weeks from the date of signing the sale agreement.

Off-plan properties are those that are not fully constructed or lying in the preliminary stages of construction. These properties are still under construction and the developer commits to deliver them by a specific date.

The documents required to purchase a property in Dubai are (i) an Emirates ID, (ii) a valid passport, (iii) a copy of the sale and purchase contract, (iv) income proof (v) bank statements.

Yes. Expats are allowed to rent their properties after getting a specific permit from the Dubai Land Department (DLD) and complying with the local rental regulations or guidelines.