FAQs - Dubai Real Estate and Development – Part 2
| 1: What is meant by leasehold and freehold? |
| 2: Why is Dubai becoming a tourist’s destination? |
| 3: What about terrorism, it’s a Muslim state isn’t it? |
| 4: Do I have to pay tax on Dubai property as a foreigner? |
| 5: Do you get a resident visa in Dubai if you buy a home? |
| 6: Which areas are the best in terms of investment in Dubai? |
| 7: What is the process by which local finance houses assess mortgages? |
| 8: What is the appeal for people and investors in the Dubai real estate market? |
| 1:What is meant by leasehold and freehold? |
| Freehold means ownership of the whole building one is buying for an infinite period of time. Currently there are new laws being introduced by the Dubai government. Also, the present freehold or leasehold option is in contract to the land developers recognized by the government. They are Nakheel, Emaar and Dubai Holdings. But there maybe no law that is introduced where the land is owned by a foreigner as freehold but the rights will rest with its developers. But on a case-by-case basis, titles have been handed out to expatriates.
It is better to opt for leasehold when one is buying apartments in high rise buildings because the freehold is not easy to implement when there is more than one tenant in the building. The leasehold concept is common overseas especially with respect to high-rise buildings. In this it is determined that the person has to maintain the property in mint condition and the granted lease period would range anywhere from 99 years to 125 years. |
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| 2:Why is Dubai becoming a tourist’s destination? |
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Dubai is increasingly becoming a tourists’ destination. It is emerging as a major holiday spot and is ever more becoming a place of choice for tourists from around the globe.
With many more illustrious and grandiose projects underway, Dubai is increasing in its stature and global appeal and is drawing more and more tourists every year coupled with returning tourists who just don’t seem to have enough. |
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| 3:What about terrorism, it’s a Muslim state isn’t it? |
| Dubai is a cosmopolitan city. It has seen rapid growth and development in the last few years. Today, because of its growing prosperity and knowing that changes have to be initiated for more economic prosperity, the country is not very rigid and as conservative as other neighboring states. So sometimes the country can be branded as ‘modern.’
But seeing this amazing growth and prosperity may not be a big factor for terrorists to strike or create mayhem. The cosmopolitan has not only embraced and adapted to work, business and economic growth but has also retained its religious, personal and traditional values, however, adapting to a more western capitalistic change on the economic front. So in light of the fact that there is abundant prosperity and happiness, Dubai as of today, does not warrant for any sort of terrorist strike or activities. It is a peaceful nation which is becoming a land of opportunity. |
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| 4:Do I have to pay tax on Dubai property as a foreigner? |
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Dubai is a tax free haven. There are no taxes levied be it on income or property. So even if one is an expatriate or a foreigner, there are simply no kinds of taxes for property bought or sold in Dubai.
But it is not the same in other parts of the world. In most places/countries, taxes are paid on assets acquired or sold abroad. In UK, taxes are not to be paid if the money is invested or deposited in an offshore bank. This is done by ensuring that rental income, if any or money from the sale of property remains offshore. This can be done by operating an offshore bank account and maintaining the transactions therein. |
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| 5:Do you get a resident visa in Dubai if you buy a home? |
| If one were to invest in a home or property in Dubai, then one is eligible for a resident visa. The only clause being that the contract should stipulate that the person is entitled to a resident visa in light of purchasing property in Dubai. Resident visas are just like regular visas that are issued when a person has a work permit and this visa does not act as a replacement to the work permit. This visa is issued for a person who plans to live in Dubai for a long period of time.
Resident visas issued with the purchase of a residential property have to go through normal immigration rules and they are renewable after every three years. Resident visas are also issued to one’s spouse and children. If a person is out of the country for more than six months, then the residence visa is rendered void. |
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| 6:Which areas are the best in terms of investment in Dubai? |
| Since Dubai is on a great expansion drive and the whole city is definitely seeing many changes, there is not one area that can be referred to or pointed out for real estate investment in Dubai. This is because the city is uniformly growing and all areas are being developed. For ex. the projects being constructed on the islands of Palm Jumeirah or Palm Jebel Ali are all exclusive properties worth investing in. Similar is the case with the Dubai Waterfront area or in the International cities, a project modeled on the different countries around the world. The final decision in real estate investment definitely lies on the investor after they consider their requirements, cost, location and other important factors. |
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| 7:What is the process by which local finance houses assess mortgages? |
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A mortgage is a loan that is given against a property wherein the property stands as collateral till the loan is fully repaid and there is a fixed interest rate also accrued on the loan. The amount borrowed depends on the income of the borrower and the price of the property. The repayment is determined by the mortgage term. If it’s a shorter repayment period, then the monthly mortgage payment will be higher. If it’s a longer repayment period, then the monthly payment is lower. The mortgage amount is calculated in the following way: Monthly income minus expenses and divided by 3. This gives an approximate amount for each month over the term. This is not based on how the property would appreciate or depreciate and it does not allow for a low-loan-to-value i.e. a large down payment and a small loan opted for. But sometimes even when one’s earning ability is good, we cannot consider that banks would grant a good mortgage amount. Also, another good option would be to lend from an in-house property lender. |
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| 8:What is the appeal for people and investors in the Dubai real estate market? |
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Dubai is a vibrant cosmopolitan city. The city is growing at an amazing pace. Its economy is growing in statures and a lot of developmental activities are underway. In that, the appeal for people from around the world to invest in Dubai’s real estate market could be:
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