Buying property in the UAE as a foreigner

Buying property in the UAE has always been a potentially lucrative proposition for investors. While recent years have seen property rise, fall and rise again very dramatically, the UAE is seen as a safe investment opportunity and the purchase of property was about as safe an investment as investors could get.

UAE property investment opportunities

Unlike many areas of the UK, UAE rental yields have usually returned double digit figures.  The average cost to rent a 3 bedroom villa in the ranches (for example) is around 150,000 AED per annum, however a mortgage on the same property (based on maximum conditions) would equate to around 100,000 AED a yield of around 50% Gross.

The issue of late was that there was a plethora of property and due to the escalating costs of living in the Emirates there were fewer and fewer people in the affordability bracket.  Couple this with a monumental off plan development strategy over the past 2 years has seen a recent correction in prices.  3 years ago the 3 bed villa in the example above would have been rented for well in excess of 200,000 AED.

However, with Expo2020 looming on the horizon, the building of huge theme parks and the increase of visitors to the country year on year making it one of the top travel destinations in the world, only benefits the marketability of the country further, which will drive immigration and job creation well into the next decade.

Expats of every nationality love to diversify their property portfolios and the UAE is an outstanding opportunity for exactly that. In addition, banks in the UAE also make it easy for non-residents and expats to purchase property using a mortgage and the process is very simple. 

Mortgages in the UAE

Mortgage lending in the UAE is predominantly linked to properties that are deemed completed by the Land Department in Dubai and by specific developers in Abu Dhabi. Lending is available in almost every Emirate, subject to approval in advance, although there is no lending for Fujairah.

Mortgages in Dubai

When looking for a mortgage in Dubai the property should be completed with a title deed, lease deed or an Oqood registered at the DLD with the completion certificate to hand.

Mortgages in Abu Dhabi

Property in Abu Dhabi can be purchased using a mortgage as long as it has been built by one of the following developers:

• Aldar
• Sorouh
• Manazel
• TDIC
• Bloom Gardens
• Burooj Properties
• Baniyas Investment & Development (Bawabt Al Sharaq)

Mortgage lenders in the UAE

There are approximately 5 lenders available to non-resident applicants, 4 of which are fairly comprehensive to use in terms of criteria and documents however they do offer higher LTVs up to 70%.

One particular bank offers non-resident applicants a very pain free (borderline self cert) mortgage which entails 50% lending with an interest rate of around 4.50%, this is a tracker rate comprising of a fixed portion and the 3 month EIBOR rate (Emirates Interbank Offer Rate). 

Documents required for getting a mortgage in the UAE

In terms of documentation most banks will require credit reports from the country of residency, 24 months bank statements, details of all liabilities including credit cards and loans etc a whole heap of documents.

However, for the 50% lending option you only need a scanned copy of every page of your passport (to prove you do not hold a UAE visa) and your last 3 months bank statements showing a justifiable amount of “credits” each month to warrant the mortgage premium in full. It doesn’t matter how that income was generated only that there are credits appearing consistently over the 3 months.  No liability letters, no credit check documentation and no proof of employment.

If you are intending to buy in the UAE you will need to attend a mortgage offer letter signing in Dubai at some stage during the process, this is mandatory and cannot be waived, it would then be worthwhile to stay to finalise the purchase at the Dubai Land Department (DLD).  Alternatively a POA can be set up through a conveyancing partner to finalise the process on your behalf.

Please note that employees, self-employed persons and even those people that don’t really fit into either category (for example, people receiving passive income, rental/retirement/investment) can apply for this unique mortgage.

When buying property in the UAE, you will also need to take into consideration the additional costs involved in a property transaction such as a property valuation fee, the realtors commission, the land department transfer fee and a charge to register the mortgage.  It is good advice to factor around 7-8% all in for all the fees.

Off-plan property investments in the UAE

Non-residents can also purchase off-plan property, but unfortunately the process is painful and time consuming and the property must have been funded by more than 50% already (so in essence you will have already paid your 50% directly) as the bank will only finance the second 50% of the payment schedule. 

The bank will not finance any speculative gain (the premium) which is built into secondary market off plan properties, this will have to be covered by the person buying the property.  Lending is not available for all “off plan” property, only those offered from specific developers.

Request a free consultation about buying property in the UAE

If you are interested in purchasing a property in the UAE, whether as an investment or to live in yourself, or would like some guidance around mortgages in the UAE, we recommend that you request a free consultation with an independent expert from our network.

To request your free consultation, simply enter your details using the form and, once submitted, we will arrange for a consultant to get in touch with you to suggest some dates and times for your free consultation during which you will be able to discuss your requirements and evaluate the options available.

If, following the consultation, you would like to proceed with any advice or services you will be free to discuss this as well, and the consultant will present any potential charges, although you will never be under any obligation to take any advice or services on offer.