Where is Dubai?

Dubai is situated on the Arabian Gulf and is one of 7 Emirates that make up the country of the United Arab Emirates, U.A.E.

What is the lifestyle like?

Dubai is a busy modern, cosmopolitan city combining a proud Arab heritage with a relaxed safe Western life style making it one of the most popular destinations for business or holiday.

Fast becoming one of the main holiday destinations in the world Dubai offers every conceivable facility whether it be beaches, sporting activities, shopping, adventure or a pure luxury break.

And Abu Dhabi?

Abu Dhabi is actually the federal Capital of the UAE and occupies about 85% of the landmass.

Until recently Abu Dhabi relied on oil for its income having about 10% of known reserves. However it is now an established commercial centre and a major tourist destination.

Most of the following comments apply to Abu Dhabi and Dubai.

What is the rate of tax?

There is no income tax; stamp duty or capital gains tax, there may be a transfer fee on some properties of up to 2% of the value.

Can I repatriate my money?

Yes, there are many International banks in the UAE and there is no restriction on transferring funds in or out.

Can I live in the UAE?

If you buy a property you and your immediate family can apply for renewable residency visas for life.

Is Dubai / Abu Dhabi a safe place to live?

Very! The UAE government is one of the most progressive and stable there is and crime rates would be amongst the lowest in the world.

What is Freehold Property?

In 2002 Dubai declared that foreigners could purchase land under Freehold Ownership in designated areas.

In Abu Dhabi a decree was made in 2005 allowing foreigners to buy and sell properties in designated areas under long term (99 year renewable) lease.

What is a Free Zone?

This is an area of Freehold Property in the Emirate of Dubai with the major benefit to businesses of being able to operate the business with total foreign ownership. No need to take a local partner.

Where are the best areas?

It depends what you are looking for.

If it’s commercial then the two main areas in Dubai are going to be Business Bay and Jumeirah Lakes Towers. These are being developed along Shaikh Zayed road and will be serviced by the Metro line. If it’s residential, popular areas for apartments and villas are South of Dubai around the Marina and Emirates Hills region. There are stacks to choose from so take advice.

In Abu Dhabi the developments are just starting but most at the moment are concentrating on Islands such as Reem which are only a matter of a couple of hundred meters from the main island of Abu Dhabi.

How do I buy?

The process is simple and there is no set requirement for conveyancors or solicitors. Once a price is agreed you will need to pay a holding deposit of maybe 1% of the sale price to take it off the market. The full deposit of 10% to 30% will need paying usually within 7 days.

The balance, if the property is ready to move into will be due on handover.

If you buy off the plan the developer may offer a repayment plan over the period of construction. There are lending institutions that will provide mortgages of usually 70% of the value to overseas investors. Mortgage repayments usually only start when you take possession of the property. You can sell at any time and do not need to wait for completion.

What is a premium?

All property, we hope, will experience capital growth; the amount of growth asked by a seller is expressed as a premium. If the original purchaser bought a property for $300,000 and decides to sell a year later at the market rate of $330,000 then the premium to the next purchaser on the original price is $30,000, or 10%. Basically it’s the difference from the original price to todays market price.

What about off the plan?

There have been bad experiences of off the plan projects all over the world, mostly connected to builders getting into financial difficulty and not completing the building.

This is very unlikely to happen in the UAE due to the restriction on foreigners to buy only in Freehold areas. These Freehold and Free Zone areas are huge projects often running into the billions of dollars. The Master Planners such as Nakheel and Emaar or in Abu Dhabi Aldar and Sorouh are amongst the largest and most credible construction / development companies in the world and are responsible for the overall planning and design of the master development. Do some googling and you will see the enormity of these organizations, also try Dubai Land.

The master planners will then allow certain development companies to construct approved buildings within the master development.

Once again the pure size and experience of these developers provides a great level of security.

In July 2007 a major announcement in  Law no.8 concerning guarantee accounts in Dubai was made, Escrow accounts.

The reason to buy off the plan is simple; you buy at today’s price and if you invest wisely your building will enjoy capital growth while the project is being built. You would normally only need to pay a deposit and either finalise payment on completion or pay installments over the construction period. You can sell the property at any time, pay off the developer and keep any profits realized.

For example, buy an office for $1,000,000 with a construction period of 2 years.

The developer requires 30% deposit = $300,000 with balance on completion.

You sell after 2 years for say $1,300,000 an increase in value of 30% over 2 years (this is very conservative for the current market, 2007).

You pay off the outstanding $700,000 leaving you with $600,000 giving you a 100% profit on your initial outlay of $300,000.

The key is selecting the right project to invest in and that’s where Dynasty comes in.

What is an Escrow Account?

In Dubai a law was passed in July 2007 governing the way developers could spend funds received from the sale of off the plan property.

All funds must be deposited to an Escrow account (Trust Account) and can only be withdrawn for the development of that specific project and only with the approval of Government appointed auditors. This gives even more security to off plan investments.

We hope that you have found this information of use; our comments are based on our knowledge of the area and local and international property trends. Dynasty Zarooni cannot guarantee the future performance of any investment.

If you would like any specific information please email us at: info@dynastyzarooni.com