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You have asked good questions and here are answers:
1. You are right. A foreigner can invest in freehold areas of Dubai and Dubai Silicon Oasis is a freehold area.
2. As per my knowledge, Dubai realty market has already touched its bottom level. Since the beginning of 2012, the market is on the path of recovery. I would not recommend you to wait for prices to fall further as prices are already low as compared to other established real estate markets and now prices will go up.
3. Your budget allows you to buy a studio apartment in Dubai Silicon Oasis and for your help, I am giving you a link of studio apartments in Dubai Silicon Oasis. You can start your search from there.
4. It all depends upon you, your agent and 3rd party to close the deal. You can visit Dubai, once you finalize the property for further processes or you can leave it on your agent as well. I would suggest you to visit Dubai and visit the property as well before finalizing any option.
5. Rental market is also flourishing and you can easily rent out your property. You can take help of Bayut to advertise your property here for free or if you want immediate results and maximum exposure, you can buy 'hot listings' as well. Otherwise, you can take help of your agent as well to advertise your property and get tenant for it.
6. No, you will not be eligible to get resident visa, if your property value is below than AED 1 million.
7. This question is already answered on this portal. You can have a look here:
Thanks Arub for your prompt response. Few more things:
- Would you recommend some agents of good repute? I tried in the past but they had some communication problem in English
- Based on your experience; just a rough idea how much below to the listed price deals are negotiated/ finalized- %age?
- I am still interested in knowing how much time roughly a buying deal takes
- Renting is the purpose of investing-so if you could give a rough idea of the yearly rental value of the two properties you sent-would be highly appreciated. I checked properties on Bayut but wanted to take your professional opinion?
- Any idea on normal duration of rental leases; 1 year or 2 years
- Which type of properties are in demand for renting; studio; 1 bed or 2 beds?
-Any link/ website that have info about documentation required to complete for buying a property
- In Dubai are there rental companies that look after the rental properties in the absence of owner for maintenance/ renewal of lease etc that one can hire? any idea about their charges?
-Would you send me more of the freehold properties/ areas; easy to rent out
-If I own a studio apt there which type of visa I could get?
To know about the more names, you must visit 'Agents' Section at Bayut.
2) It depends on your negotiation skills and ability to bargain. Moreover, it also depends on the seller. For instance, if he is a distressed seller he can be willing to sell even at minimum possible price. Currently you can expect a bargain of up-to 10% depending on your negotiation skills.
3) Here too it depends on you and seller how fast you both communicate with each other, visit the property, finalize the deal. It also depends on how quickly you make the payment and register property in your name.
4) As far as I know you can expect a rental of AED 15000 to AED 20,000 for these studios annually. However, its a rough idea as rent varies with the area as well.
5) The normal duration of lease is 1 year in Dubai. After which if you want to live more in the property and landlord is also willing to keep you, you are required to renew your lease for another year.
6) It depends on requirement of tenant which property size suits best to his needs. According to my knowledge, small size properties which include studio, one bedroom and two bedroom properties are more in demand in Dubai as compared to large size properties.
7) Buyer is only required to present passport copy as ID and proof of funds to buy property in Dubai.
8) According to my knowledge, such companies do not operate in Dubai. I never heard about them operating in Dubai . Rest, you can also confirm from others.
9) Some areas which are freehold in Dubai include Dubai Marina, Jumeirah Lake Towers, International City, Downtown Dubai and Palm, Jumeirah etc. To know about the freehold properties available for rent in these areas, kindly make use of 'Rent' section featured at the home page of Bayut. Enter your specifications and results would be shown to you.
10) Since the value of studios are below than 1 million AED, you cannot get residency visa on it.
Hope you would find this information useful. Have a good day!
Would you recommend few areas/ buildings that I should focus on that are high in demand for renting and I could have a good return on my investment. I already have mentioned my budget. Based on this experience I will go for future investments.
I just searched international city and found a studio in Greece apartment at AED 154, 000.00 it Bayut ID is:752191. Would you comment on this property based on my above question?
Regarding question 8; if you could expand on it-how buildings are maintained when there are multiple owners? do all owners have some type of one building manager who look after the emergency maintenance/ wear and tear of the building and owners pay some kind of fee to this building manager?
Hope all is well and Madiha has addressed your questions quite nicely here.
I will touch on a few topics to provide further assistance.
First of all the property market is recovering in dubai and now is a great time to invest without a delay. Many reports are indicating that the market has already bottomed out and is on the path of recovery. The first half of this year has seen over 40% more transaction as compared to previous year's first half. the prices you are seeing now will never be available in the future.
In terms of areas, please please only consider high-end areas as even if the markets takes a dive or goes through another slump, you will not feel the pressure as high-end areas always remain in demand and are much easier to rent out. With International city you will always be struggling.
I would recommend Dubai Marina as the first choice of investment followed by JLT, Business Bay, Downtown, and Discovery Gardens. With your budget you are looking to buy a studio in discovery Gardens, however if you can increase your budget a little then Dubai Marina should be your first choice of investment, Marina is the most in-demand area, a great location with all the facilities.
With the listed price, normally there isn't a lot of room to negotiate, however 10% reductions are possible, depends on the deal and desperation of the seller.
A deal would normally require the following steps, finalizing the price between buyer and seller and you dont need to be in Dubai for this, Obtaining an NOC from the developer and then carrying out the transaction at the land department which requires bout buyer and seller's presence at the department unless there is a power of attorney in place for a third party.
In Dubai Marina you are expecting an rental yield of 7-8% per annum on your investment. This is significantly higher than a typical value of 3%-5% in the west. The rental yield (ROI) is actually what you get in hand after deducting the maintenance charges which are required to be paid by the landlord.
Normal rental leases are for a period of one year, and need to be renewed on n yearly basis.
The most in-demand properties from an investment and renting point of view are 1 beds and studios.
Documentation required for buying a property can vary from one agency to another, however you would need to sign an MOU agreement, initial fund deposit for agency commission, provide passport copies and perhaps one or two other forms as per the agency requirement.
There are companies and agencies in Dubai who can look after your property, rent and maintain them and there charges are roughly 5% of the rental amount or sometimes a fixed charge depending on the property deal. Let me know if you need further help with this.
Madiha has given you factual info about the residency visa, the property bought must be valued over 1 million AED.
Please have a look at Bayut search trends to see which areas are in more demand.
Buildings are normally maintained in Dubai by maintenance providing companies. They charge a fixed fee per annum depending on the property size are location. This needs needs to paid in advance and its the responsibility of the landlord to pay this amount independent of the fact if the property is owned by one, two or more shareholders.
Hope this helps and let me know if you need more help or want me to expand on a particular topic.
Thanks Zeeshan for such a comprehensive response......it is really helpful.
I checked few studio apts in the areas that you recommended but they are around 250k to 500k AED. Marina is a good place but initial investment is quite high however rental return is high too. What about Dubai silicon oasis? how is the occupancy rate in terms of renting? don't you think these areas like (international city; silicon oasis etc) would be the preferred place for middle class who could comfortably afford a 20K-25K yearly rent? or majority of the people there prefers areas like Marina, its location, and facilities and are in higher income bracket?
I did that property search trends-international city ranked 4th for renting and 9th for buying. Silicon oasis ranked 14th for buying and 16th for renting. How do you see International city here from renting perspective?
There is a studio apt in discovery ID is: Bayut ID:841202; listed price is AED 240 K and expected rental is 29, 333 yearly. If we do calculations break-even is roughly in 8 years. I know it is not that much simple!
Zeeshan could you do this math for me specific to the property I mentioned above; best possible figures that you could place based on your experience not what website says:
Negotiated buying price+all buying fees( govt fees and agent commissions)/rental return yearly -yearly maintenance charges and other charges= break even in years
One more thing, I heard in Dubai due to hot and humid climate; structures are demolished after certain period of time? is it true? do you know how much useful life of a structure is established there when a plan is approved? could you please provide some info around it what happens if a building demolished?
Actually you are correct, the more you invest the quicker you multiply. Anyhow the reason I am always more keen on investing in Marina or other areas I specified is simply because they always remain the highest in demand and have relatively low service charges. However you are correct, with International city, it caters to the middle class and therefore the demand will always be there. Since after the collapse in 2008, the dynamics of the market totally changed. Rents plummeted and people wanted to shift to better areas. However rents are again going up and therefore the demand for areas like International City is gradually rising as you must have noticed in the rental trends. the major downside with Intl City and Discovery Gardens is their service charge fee which is to be paid by the landlord. Take Discovery Gardens for instance. The annual rent from a one bedroom apartment here is around Dh45,000, but its service fee hovers around Dh19,000. In International City too, the picture is no less dismal. For a 740 square foot one-bedroom apartment that fetches only Dh30,000 in annual rents, the annual service fee is around Dh12,000.
Silicon Oasis is also quite close to Intl City therefore they both pretty much fall in the same bracket. Regarding the particular property you mentioned in your last post, the breakdown of cost would be as follows.
Registration Fee: 2% @ 4800
Commission Fee: 2% @ 4800
Service Charge: 1 yr at Approx 8000 - 9000
Total Cost: Aprrox 258K
Rental Return: 30K per annum
Minus Service Charge: 8K per annum
Minus Commission @ 5%: 1500
Total Net Income Via Rent: 30-8-1.5 = 20.5K
Lets assume you get 20K into your pocket at current rental rates.
ROI = 13 years.
What you should aim at is not the ROI in terms of rental income, but the equity gain over years which could be substantial.
I keep insisting to everyone that its a long-term investment market with good rental yield, but the long-term cannot be taken out of the equation as it was the case in the past.
Hope this helps and let me know if you require further help.
You probably missed last part of my post and didn't respond to that one where I asked buildings in Dubai are demolished after a certain age due to climate. Your response would be very important on this for equity purposes.
Other thing regarding 240K property in Discovery Garden, in your calculations you put 8000-9000 servicing charges-should I say in actual charges would be around this figure +-5%? (because you do not recommend these areas due to high servicing charges)
If I were to ask you price this 240K property based on prices prior to 2008 economic meltdown; what would be the price of this property and yearly rent? Do you think prices of 2008 or before will return?
If you know of few properties that you recommend and email to me the details- a close match to your criteria and my budget?
I am here to help people make a better decision when buying a property in Dubai, so I am more than happy to help anyone. If I wans investing I would probably be doing the same level of research if nor more.
Regarding the age of the buildings, I am not certain about how long they are suppose to last for, however I do remember speaking with a developer once and was informed that buildings are suppose to last for at least 100 years in dubai after which they would either need demolishing or reinforcement.
Yups the actual service charge would depend on the apartment size but a margin of 5% is sufficient.
The Studios at their peak in Discovery were going for 600K plus and at times up to 700k depending on size. This price is not likely to return in the short-term but will eventually return in the long-term. Every investment in Dubai is now going to be long term.
I might be able to put you in touch with an agent in Dubai who can help you further. I will email you the details separately after speaking with him.