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A Guide To Property Investments In Dubai

1.0 Introduction

2.0 Geography and Demographics

3.0 History

4.0 Geography

5.0 Demographics

6.0 Economy

7.0 Acquiring Property By Foreigners In Dubai

8.0 The Buying Process

9.0 Ongoing Costs

10.0 Mortgages

11.0 Why Purchase Through Offshore Properties?

1.0 Introduction

Purchasing property in Dubai is an excellent investment tool. As the world's number one travel destination, it's the ideal place to find investments in off plan property. At Offshore Property, we provide you with all of the information and guidance you need to make this happen.

This Guide is designed to provide you with information about purchasing property in Dubai, including a vast amount of information on the culture, the economy, the taxes and the process of purchasing. With these tools, you will be able to make a decision regarding whether or not this is the right place for you to stake your claim on property.

Offshore Properties provides you with professional service to help professional investors, funds and second home purchasers purchase property throughout the world, including in Dubai. We have dedicated time to finding the very best developers, in an effort to provide you with the more professional buying experience. Throughout Dubai we have several key areas in which we work with internationally known partners to aid in facilitating property to you.

You can learn more about Offshore Properties at SOME FORM OF CONTACT INFORMATION HERE

2.0 Geography and Demographics

3.0 History

The first mentions of Dubai in history date back to 1799, when it was simply a small fishing settlement. Around 1830, a branch of the Bani Yas, a tribe from the oasis of Liwa was led by the Maktoum family to take over the village (the family still remains ruler over the emirate today). Traditionally, these inhabitants herded sheep and goats, fished, mined pearls, and cultivated dates. However, trade was built up as well leading to the building of some of the largest docks in the Gulf, as well as over 300 shops in just the Deira district.

Through treaties signed into ratification in the 19 th century, Dubai, along with many of the future emirates, granted control of their defense and foreign affairs to the United Kingdom, becoming one of the Trucial States of the Persian Gulf. The commercial success of Dubai attracted Indian and Iranian traders, who moved in as settlers and helped achieve growth for the area. With the finding of oil in 1966, the area's way of life evolved, and the first exports followed in 1969. However, Britain remained in power as protectorate until 1971. Following the withdrawal of the Britain, Dubai joined the United Arab Emirates, formed with six other emirates: Sharjah, Ajman, Fujairah, Abu Dhabi, Quwain, and Ras Al Khaimah (the last joining in 1972).

Oil revenues have given way to the tourism industry as the major economic product, and Dubai continues to grow as an up and coming power. Unlike most Middle Eastern countries, Dubai and the rest of the United Arab Emirates are considered on par with most of the leading West European nations in their economy and way of life.

4.0 Geography

Geographically, Dubai is located along the northern coast of the United Arab Emirates, along the southern shoreline of the Persian Gulf. Approximately 4,114 square kilometers, the city of Dubai within the emirate of Dubai is a major port for the entire country. The emirate of Dubai is the second largest emirate in the country and the fastest growing.

The UAE itself is bordered by the Gulf of Oman and the Persian Gulf, located directly between Oman and Saudi Arabia. The total area of the country is 83,600 square kilometers and includes no water, causing a need for irrigation of crops throughout most of the farming communities, as rainfall is rare and inconsistent. Comparatively, this is approximately equivalent to the size of the state of Maine. The UAE claims over 1,300 kilometers of coastline and has a flat, barren terrain merging with rolling dunes and a vast desert that cover most of the country. In the eastern portion of the country, it is mountainous and slightly cooler. The highest point in the UAE is Jabal Yibir, at 1,527 meters. There are frequent sand and dust storms throughout the dry desert lands.

Dubai is divided into 44 communities, the boundaries of which are major streets. Here is a listing of their regions, by number.

1. Al Barsha	23. Deira
2. Al Burj	24. Emirates Hill 1
3. Al Garhoud	25. Emirates Hill 2
4. Al Hamriya	26. Hor Al Anz
5. Al Jafilia	27. Jaddaf
6. Al Karama	28. Jebel Ali Free Zone
7. Al Mamzar	29. Jumeira
8. Al Mankhool	30. Jumeira 2
9. Al Quoz	31. Jumeira 3
10. Al Quoz Industrial Area 1	32. Marsa Dubai
11. Al Quoz Industrial Area 3	33. Mirdif
12. Al Qusais	34. Oud Mehta
13. Al Qusais Industrial Area	35. Port Rashid
14. Al Safa 1	36. Port Saeed
15. Al Safa 2	37. Shindagha
16. Al Satwa	38. Trade Centre 1
17. Al Satwa East	39. Trade Centre 2
18. Al Sufouh	40. Umm Hurair 2
19. Al Tawar	41. Umm Suqeim 1
20. Al Wasl	42. Umm Suqeim 2
21. Bastakiya	43. Umm Suqeim 3
22. Bur Dubai	44. Za'abeel

In some cases, Dubai International Airport is considered its own community area.

5.0 Demographics

Population: 1,321,453 (city, est. July, 2006), population density of 293.94/sq. km. (overall population of the UAE totals 2,602,713)

Age Structure (UAE totals)

0-14: 24.9% of which 331,012 are male and 317,643 are female

15-64: 71.2% of which 1,125,286 are male and 726,689 are female

65+: 3.9% of which 74,700 are male and 27,383 are female

Median age: 28.1 years old on average

Male median age: 34.8

Female median age: 23.3 years
Population Growth Rate: 1.52 percent as of 2006 estimate

Birth Rate: 18.96 births per 1000 population as of 2006 estimate

Death Rate: 4.4 deaths per 1000 population as of 2006 estimate

Ethnic Groups:

Emirati

Iranian

Other Arab

South Asian

Other Expatriates (including Westerners and East Asians)

Note: less than 20% are UAE citizens

6.0 Economy

In 1966, oil was discovered in Dubai, and the first exports went out in 1969. However, the reserves in Dubai equate to less than one-twentieth of those in Abu Dhabi (another emirate), and oil doesn't represent a large portion of the emirate's income.

In the 1970's, Dubai and its sister city Deira (across the Dubai Creek) became important to Western manufacturers as a trade route, bringing with them the growth of the economy in the port area. This included the building of a financial center and headquarters along the shoreline, with Dubai becoming established as a center for free trade in gold.

Dubai's main source of income currently has become the tourist industry, being the home of Jebel Ali, the largest man-made harbor in the world (built in the 1970's). It is also a major player in the IT and financial industry, with new hubs in the Dubai International Financial Center (DIFC). As a center for finance and tourism, Dubai International Airport saw over 24 million passengers through just Emirates Airline in 2005.

6.1 GDP Growth

In terms of GDP and economy, Dubai and the rest of the United Arab Emirates are placed on high as a Middle Eastern power, remaining on par with leading Western European countries in value and rate of growth. In 2006, the real growth rate of the GDP was 10.2%, adding up to approximately $49,700 per capita and a total of $110.6 billion in the official exchange rate.

This growth is due partly to the ever-increasing demand for oil but also to the rise in investment in property in Dubai, as well as the growth of tourism in the populous city. The growth in the GDP and overall economy has allowed the UAE government to focus on job creation and infrastructure expansion, transforming the country from a small desert wasteland to a modern first-world country with a high standard of living.

6.2 Inflation

As of the 2006 estimate, inflation was at 10 percent, having risen over the last few years with the economic and population boom.

6.3 Interest Rates

The UAE Central Bank is the central banking unit in Dubai. It works with the banks across the world. The UAE currently has no restrictions or regulations on foreign exchange. Interest rates vary, depending much on US interest rates. Mortgage loans are variable, with introductory interest rates running about 2.5% and variable rates capped between 8.5% and 9.5%, depending upon the stage of the loan.

6.4 Unemployment

The unemployment rate throughout the UAE is low, at 2.4% (latest information as of 2001). The tourism industry in Dubai, as well as construction of new buildings all the time, continue to provide work for most in the country, and many expatriates actually travel to Dubai to take advantage of the economic prosperity, holding jobs there.

6.5 Budget Deficit

Strong oil prices meant a slash in the budget deficit for Dubai and its fellow emirates between 1999 and 2000, dropping from 29.36 billion AED to only 9.542 billion AED. However, due to a decline in oil prices, revenues dropped for the UAE, and the budget deficit rose sharply to 26.791 billion AED in 2001 and 29.175 billion AED in 2002, a return to what it had seen prior to the oil boom. However, the rising GDP, with a rise in the tourist industry creating huge profits for the country, the budget deficit is expected to fall sharply again in the next 3-4 years and perhaps disappear in the next 10 years.

6.6 Currency

The current form of currency accepted in Dubai is the Emirati dirham (AED), used throughout the United Arab Emirates. The exchange rate to the US dollar has remained steady for years, at approximately 3.673 AED to the US dollar. The inflation rate in the country seems to follow that of the United States closely.

6.7 IMF

Dubai is part of the six-nation GCC (Gulf Cooperation Council), which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, which operates as a single unit within the IMF. This region has contributed fundamentally to the need for oil production, as well as offered financial assistance to support those in Lebanon, the Palestinian territories, and Iraq who have been negatively affected through the latest conflicts.

6.8 Trade

Trade is an important part of the economy in Dubai and its fellow emirates. Its major export product is crude oil, making up 45% of its export commodities. Other products include natural gas, re-exports, dried fish, and dates. Its major import commodities include machinery and transportation equipment for all of the new construction, chemicals, and food. The last of these is due to the fact that, aside from small areas of land where relatively versatile fruits like dates can be grown, there is little fertile ground for the cultivation of food within the country.

India and East Asia are the main export partners for the country, with Japan constituting about one quarter of the export purchasing power in 2005, while several countries are sourced for imports in smaller quantities, with the UK, China, the US, and India being the four leading sources of import goods in 2005.

6.9 Politics

The UAE government is a federation that specifies certain powers be delegated to the federal government, while other powers are reserved for the member emirates, including Dubai, Abu Dhabi, Ajman, Al Fujayrah, Ash Sharjah, Ra's al Khaymah, and Umm al Quwayn. The federation gained independence from Britain in 1971, at which time it introduced a federal court system. However, Dubai and Ra's al Khaymah are not fully integrated into this court system. Dubai, as well as all other emirates, has secular courts reserved for criminal, civil, and commercial matters, as well as Islamic courts utilized to resolve family and religious disputes. The legislative branch of the federal government is constituted by the Union Supreme Court, and the president has power to appoint judges.

The executive branch of government consists of the President (KHALIFA bin Zayid al-Nuhayyan since November of 2004), the vice president and prime minister (MUHAMMAD bin Rashid al-Maktum since January of 2006), the deputy prime ministers (SULTAN bin Zayid al-Nuhayyan since November of 1990 and HAMDAN bin Zayid al-Nuhayyan since October of 2003), and a Council of Ministers appointed by the president. A Federal Supreme Council (FSC) also exists, comprised of the rulers of the seven emirates, which is considered the highest constitutional authority. This Council is given authority to establish general policies and sanction federal legislation. The rulers of Abu Dhabi and Dubai have veto power.

Presidents are elected by the FSC after 5-year presidential terms, with no limit on the number of terms a ruler can serve. The vote of the Council must be unanimous. The last election held in 2004 was upon the death of the UAE's first President (and founding father) ZAYID bin Sultan Al-Nuhayyan, and the next election will be held in 2009. The president appoints the prime minister and deputy prime ministers.

The legislative branch consists of the Federal National Council (FNC), with 40 seats. All are appointed by the rulers of the constitutional states and serve 2-year terms. Half of the FNC will be up for reelection at one time. The electoral college consists of 6,689 members, 1,189 of which are female. These individuals are appointed by the rulers of the seven emirates and are the only eligible voters and candidates for the FNC. This branch, while able to review legislation, does not have the power to change or veto it.

6.10 Tourism

Tourism is the major source of income for the city of Dubai, which has invested in various projects over the past two decades and continues to build attractions for tourists across the world. Ultra-modern architecture is reflected in the Emirates Towers, the 12 th and 24 th tallest buildings in the world, and the Burj al-Arab is the tallest hotel in the world (2005), located on its own island.

The Dubai Mall is the world's largest shopping mall (still under construction, due for completion in 2007), and the world's tallest building, the Burj Dubai (whose final height has not yet been released), is set for completion in 2008. Dubai Marina and the Dubai Waterfront (an ultra-hip shopping and eating district on the bay) are huge attractions. The underwater hotel, Palm Island, and Dubailand (much like Disneyland) are all set to open in the next three to four years, promising more tourist income in the near future. Dubai even offers escape from its sub-tropical and desert climates in an indoor snow-skiing facility that operates year-round at a comfortable 32 degrees, with manufactured snow.

In short, due to demand and the number of visitors that come to Dubai each year, it is quickly rising among the most popular tourist destinations in the world.

7.0 Acquiring Property By Foreigners In Dubai

Prior to 2002, no individual that did not hold a citizenship in the United Arab Emirates was allowed to purchase any land or property of any kind. In free zones only, some large companies were invited to rent/lease space for their businesses without restrictions on Internet and other media access. Individuals without citizenship choosing to live in Dubai were also forced to rent or lease only.

7.1 Residential Property Investments

The growth of the tourist industry in Dubai has equated to a huge rise in property value throughout the emirate, especially in the city proper. Because of this boost, construction of both commercial and residential property has increased by leaps and bounds over the last few years. In fact, it is estimated that somewhere between 15% and 25% of the world's cranes are currently in use in Dubai.

Construction of residential property has boomed especially since 2002, when there was a reversal of the law that formerly prohibited non-nationals (non-citizens and non-resident former citizens) from owning property. Now, while land is still off limits, there are provisions for ownership of residential properties by individuals who are not citizens of the United Arab Emirates, further increasing property value in Dubai.

7.2 Residential Housing

The rent prices in Dubai have skyrocketed due to the influx of individuals from other countries who are attracted to the no-tax benefits offered in the country for professionals and foreign companies. However, in order to slow the incredible increases in price, Mohammed bin Rashid Al Maktoum (current ruling party) issued a mandate that prices could not rise more than 7% per year through 2007. Because the residential housing market is a relatively new venture in this area of the world, legislation is still being developed and imperfect. However, it is coming along as the nation grows. There are 44 various communities within Dubai, subdivided into various sizes with major roads as their boundaries.

In regards to the availability of property in Dubai, most residential units are configured as high-rise apartment buildings. Much like property in New York, these facilities are highly priced and much in demand. This means that, for those who wish to invest in property in Dubai, it is essential to purchase prior to construction (choosing a property from plans). Properties in the Dubai Waterfront sector and on the prestigious Palm Island are especially coveted. While these are good investments for the future, they are also extremely high in price.

The first villa freehold properties that were occupied by non-UAE nationals were high-end neighborhoods that were designed by Emaar Properties (one of the largest property tycoons in the country) were the Emirate Hills consisting of three smaller neighborhoods known as The Meadows, The Springs, and The Lakes. New construction into which interested investors can look forward is a 30-story, 200-apartment skyscraper that rotates 360 degrees slowly, completing a turn once a week. This project is planned for the center of Dubailand and is set for completion in 2009.

There are some details that you should understand about purchasing property as a foreigner in Dubai. Take these tips into consideration.

The first consideration for purchasing property is to have an oral agreement between buyer and seller. A binding agreement to purchase the property is drafted and executed as a real estate sales contract between parties.
This will determine the steps it takes to purchase the property including the steps that you will take to secure financing.
A deposit should be made in the amount negotiated between the buyer and the seller.
A final sales agreement that shows that the property is changing hands is issued upon satisfaction of all other requirements, and the remaining money due to the seller is paid. The deed for the property is given to the buyer, who becomes the new owner.

As a foreign national, purchasing property in Dubai entails some additional requirements that do not exist in other parts of the world:

If you are a foreign national, you are typically required to provide some form of collateral beyond the real estate being purchased due to the instability of the region.
The individual intending to make the purchase needs to be certain that he or she has unlimited access to the additional property used for collateral.

8.0 The Buying Process

Purchasing property in Dubai is something that is done commonly since the inception of the new laws allowing foreigners freehold purchase rights, and there has been an increased demand for foreign property purchases. Here are some steps that you should consider.

1. Determine the budget that you have. Using a financial advisor, if you like, is a benefit here. Determination of what you can afford to spend is probably the single first step that should be made.
2. Work with Offshore Properties to choose the correct property for you. You will begin the process with completing a sales confirmation agreement and then pay a fee to reserve the location for you. These are designed based on the location and the development details you are provided with.
3. Once this reservation fee is paid, you will then work with your sales manager until completion of the purchase. You can call on them anytime you need to for any question or need you have.
4. The Conditions of Sale will be sent to you. At this point, the property is taken off the market for about 28 days. All documentation that you have must be returned to Offshore Properties (through your Sales Manager) as soon as possible.
5. Your Sales Manager will also help you through the legal process, by appointing, if necessary, a legal advisor. This information is recorded into the Sales Reservation Form.
6. From here, the draft Conditions of Sale agreement, the conveyance plan and all other documentation is sent to the legal advisors for completion.
7. Upon your signature of the formal offer to purchase your property, you will need to make your deposit fee. This information is provided based on the particular property you are purchasing and according to your Payment Plan.
8. When using a mortgage or equity release from your current property, this information needs confirmation with the legal advisor and your Sales Manager. The goal is to have the mortgage offer received and accepted as soon as possible and then to forward this information.
9. You should follow the Payment Plan for details on making payments.
10. The time it will take to construct the property is listed on your contract. At the point of completion, you'll be offered an inspection of the property. During this time, the sales team will take you through the property, answering any questions you may have. In addition, you will go through a packet that describes the hand over policies including all you need to know about the actual property and maintenance procedures.
11. Any additional options that are take advantage of will be provided to you.
12. Your property must then be registered with the Dubai Property Registrar. You will need to be present, or your Power of Attorney holder will need to be. It must be signed in front of an official notaire.
13. The next step is a property search, which is a formality that is done for any purchase. Although this information is already collected by Offshore Properties, this will be a requirement for purchases.
14. You will need to provide information to the Title Deeds Registrar which will include information such as the identification, passport photos, title deed documentation showing the exact location, and Power of Attorney if necessary.
15. You receive the official title and deed to the location, which will show your name on it. This final agreement is called the Acte de Vente, or "final deed of sale."

Throughout this process, Offshore Properties will help you through all of the paperwork and give you guidance on what the next step is. The behind the scenes work that we'll do helps you to ease through this process.

8.1 Taxes and Fees:

The following are the costs you should include on top of the purchase price when buying property in Dubai.

8.2 Lawyers/Solicitors Fee:

No legal representation is required, though legal advice is recommended.

8.3 Notary Fee:

No notary is required, though legal representation is recommended.

8.4 Real Estate Sale-and-Acquisition Levy:

No national registration is required to purchase property in Dubai. The right to obtain freehold rights on your property is provided with most non-UAE purchases of property. Because all property available for purchase to foreigners is within special zones, contract structures must be passed before the government prior to asking customers to sign.

8.5 Real Estate Tax

There are no property, capital gain, income, wealth, land, or inheritance taxes in Dubai. Upon completion of construction of a property, there is a 1.5%-2% registration tax payable to the government.

9.0 Ongoing Costs

9.1 Running Costs

It is good advice to have your utility bills paid via automatic bank withdrawal; otherwise overdue bills will have to be paid in person at the central offices of the utility provider, and there are significant additional charges for overdue payments.

9.2 Electricity

Your electricity bill is calculated on the total amount of Kwh of electricity you use. The In order to get utilities connected, tenants must contact the city's utility provider (usually in person) and present a tenancy contract and a refundable deposit (1,000 or 2,000 dirhams).

9.3 Water

This bill varies on region and whether or not you use the main sewers or a septic tank. You have meter for your home or property and you can pay your bill online or to a direct location. Note that, when traveling, individuals still may wish to drink bottled water, as only water in Abu Dhabi and Dubai are considered completely clean in the UAE.

9.4 Property Insurance:

There are different types of insurance that you will want to use while you maintain your property in Dubai. Property insurance is compulsory for those carrying a mortgage, and some loans require proof of life insurance. Insurance against natural disasters is the most important elective insurance, since crime in almost non-existent in Dubai.

9.5 Price Of Buying:

If you were to buy a home in Dubai for 200,000 AED it would break down as follows:

There are many variables the only consistent item is that of property tax at 4,000 AED
You will want to include approximately 3,000 AED for miscellaneous fees

This will give you an approximate total of 207,000 AED for the initial cost of a home in Dubai, not including any utilities or start up costs.

10.0 Mortgages

Obtaining a mortgage for your property is an important process to obtaining the purchase of your property. You have two basic options to consider.

Use your current equity, in property that you currently have, to finance your property purchase.
Obtain an overseas mortgage based on your qualifications for the property.

Should you use the equity that you currently have, there are added bonuses. You will be able to secure the property faster with this type of payment. Yet, you should work with a legal advisor to insure that the title is free and clear and that there is no risk of losing your investment.

burj al arab

Should you decide to find a lender for the Dubai property, you can do this by finding a lender within Dubai to provide you with a loan or even through international lenders. It is, however, recommended to finance your property through a lender in Dubai. To do this, you may want to use an overseas mortgage specialist. They will know the ins and outs of the laws and be able to help you through the process easier. You will need to have proper identification as well as adequate credit to show your worthiness to these lenders.

A Dubai mortgage is a fairly straightforward product. The property itself, as well as a separate collateral property (see explanation on page 12), is used as security for the mortgage funds. Your lender will set the rate of interest. Most types of mortgages offered are similar to those in the United Kingdom and the United States.

11.0 Why Purchase Through Offshore Properties?

For those considering the purchase of property in Dubai, one of the most important decisions that you can make is to do so with a qualified, experienced and reliable company at your side. The legalities and the purchase process are long and can be complicated. With a skilled solicitor or real estate agent at your side, though, it can be a smooth transaction that helps you to secure the land you wish to own in Dubai. A company like Offshore Properties makes for the ideal companion on your journey to owning Dubai real estate.

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