Investors Guide to The United Arab Emirates

The Purchasing Process

Buying a property in the UAE follows a similar process to many other overseas investment locations, with secure systems in place to protect investors. Variation may be encountered in the payment schedules between different developers, however the full process will generally be the same.

Payments are usually made in the local Dirham currency, AED, and the holding deposits will be approximately equivalent to 3,000 GBP. Once the holding deposit is paid to either a lawyer or the developer, a Private Purchase Contract (PPC) will be issued.

The PPC will outline the payment schedule and obligations of both the buyer and the developer during the construction of the project. Often the staged payments will be between 10% and 20% of the purchase price, to be paid in 3 to 6 month intervals.

A lawyer specialising in UAE real estate purchases is advisable, although not obligatory. A lawyer will be able to advise clients on any purchasing procedures and also thoroughly check through the legal paperwork required by developers to ensure the project properly adheres to legal regulations. Legal fees vary depending on the company and are usually 1% or 2% of the purchasing price. Part of the legal fees may be requested upon issuing the PPC, with the remainder to be paid at completion.

Payments on UAE projects are often held in escrow accounts, providing further security to the investor. At the completion of the project, the additional purchasing costs will be paid in order to legally register the property.

Fees & Taxes

The UAE offers a tax free location for property investors with an absence of stamp duty, inheritance tax and income taxes, creating a highly profitable investing location with increased potential for capital gains and rental yields. Although taxes are not charged on properties in the UAE, it is recommended to speak with a reputable financial advisor to ensure the buyer understands any taxation that may be payable on a UAE property in their home country. The purchasing costs associated with buying in the UAE include:

• Land Registry fee: 1.5%
• Legal fees: 1%, approximately

Financing the Property

Until very recently, purchasing a property in the UAE was made by either a cash transaction or from releasing capital or re-mortgaging another property, as the mortgage market was almost non-existent. The increasing demands from foreign investors have opened the market with the assistance of various international banks operating in the area, including HSBC Middle East Bank. The opening of the mortgage market is set to further increase the buying potential and interest from overseas property investors. More about overseas property finance

Visitors Guide to the UAE
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