Commercial Buyer's Guide
Whether you are an investor looking for above average returns or a business owner looking to fix your outgoings, the process of purchasing commercial property in Dubai can be a minefield. Before commencing your search for the perfect new space the following points should be considered…
Who Is Eligible To Buy?
Any person or entity of any nationality, whether based overseas or a resident of Dubai, can purchase in Dubai's commercial property market.
What Documents Do I Require?By an Individual:
- Passports for all Buyers
- Certificate of Incorporation
- Memorandum and Articles of Association
- Board Resolution
- Signing Authority letter
- Passport copy of signatory
- All of the above must be attested by the UAE Embassy
Do I Get A Residence Visa?
Freehold Or Free Zone?
Free Hold- Property ownership free of any leasing agreement or contract. The owner and user is the same person, and the right to use and ownership lies with one person only i.e. the owner. The property ownership is subject to the laws and regulations of the country the property is located within. Free Zone -- An area within a country (a seaport, airport, warehouse or any designated area) regarded as being outside the country's customs territory where importers may bring goods of foreign origin without paying customs duties and taxes, pending their eventual processing, trans-shipment or re-exportation.
Can I Get A Mortgage?
In line with the growth that the Dubai Realty Market has experienced, local banks have expanded their mortgage market. Mortgages are available on a 10 to 25-year basis through Smith & Ken's preferred Mortgage partner, Oxygen Home Loans.
The advantage of using an Independent Broker rather than one mainstream bank is that you will receive an overview of all the products available not just a biased view towards one's product. Contact Oxygen Home Loans on +971 4 439 4322 for more information on current rates and offers.
What Are The Government Charges?
There are currently no government taxes of any kind when purchasing a property in Dubai. Neither is there a capital gains tax. When the Dubai Lands Department registers the property title, buyers must pay a 1.5% tax based on the purchase price of the property. If the property is purchased with a mortgage, buyers will pay an additional 0.25% of the value of the loan.
What Other Fee`S Are There?
There are a number of fees involved. To register the property in the new property owner's name, you are required to pay a transfer fee to either the Developer (Under Construction) or the Dubai Lands Department (Completed) dependent on the status of the property, and if you're purchasing with a mortgage then there is also a payment of 0.25% of the value of the loan to be paid to either the Developer or Dubai Lands Department. In addition, should the property you're buying be complete and already used, there is a service maintenance fee to be paid to the seller on a pro rata basis. Smith & Ken charges 3% of the net selling price to the buyer as an agency fee.
What Are Service Charges?
Service Charges are levied in order to maintain the various common areas and facilities of the Community, the building and to generally ensure these are properly managed and administered. In many of the new property developments and residential buildings throughout Dubai service charges are levied on the owners by the co-owners associations, and collected by a manager appointed on behalf of the associations. In a lease situation, these charges will generally be paid to the landlord. Services charges throughout Dubai vary widely, depending on the area and the facilities and features of the property in question. Larger community developments also charge their property owners an annual community charge, normally paid to the master developer of the project.
Developers' obligations to complete and handover property on time are dealt with contractually under the sale and purchase agreement (or as applicable, the lease agreement). If the property is not yet constructed, the agreement will typically provide an estimated handover date and usually the agreement will allow the developer a fair bit of latitude in terms of extending the date. As in many other regions, purchasers must be prepared to anticipate possible delays when awaiting possession of a property under construction.
Any Property Warranties?
Warranties covering defects in property are dealt with contractually, but it is common in Dubai for developers to repair general defects for a one-year period. There are codes of standards applied by the Dubai Municipality regarding building permits and contractual clauses. The developer will have to maintain the standards as stipulated in the regulations issued with regards to building construction, and also safety issues. In the event of a problem, assistance can be found from the contract entered into with the developer. This may contain building covenants, which often provide a guarantee of workmanship of 10 years. There is also the civil code of the UAE, which contains protection regarding building standards. Under the Civil Code, building engineers and consultants are liable for structural defects to a building for a period of 10 years.
How Do I Buy A Property?
At Smith & Ken Commercial we aim to find you the property that's best suited to both your needs and investment strategy. Once we have found the property you're looking for and a price is agreed with the seller, a deposit amount of 10% of the agreed price is required at the contract-signing stage of the Memorandum of Understanding (MOU). Upon signing the MOU, our consultants will ensure that all the required documents from the seller have been checked and verified. Once the MOU has been signed by both you and the seller, we will introduce you to Smith & Ken Conveyance who will be responsible in aiding you through the process and the completion of the procedures which will be finalized at either the Developers or Dubai Land Department office. The transfer procedures and requirements are different dependent on the status of the property which is either under construction or completed. Our Conveyance team will provide all the guidelines and assistance and will ensure the property is transferred into your name as smooth and hassle free as possible.
Typical Purchase Timeframe?
Purchases normally take between two to six weeks to complete through Smith and Ken Conveyance who will handle the process on your behalf until the completion of the transfer.
Can I Re-Sell The Property?
You can sell your property to anybody. This means that they will either take over the payments to be made to the Developer should the property still be under construction, or pay 100% amount due to you should the property be complete and fully paid.
How Do I Connect Electricity & Water?
Smith & Ken can do this on your behalf provided a fee of AED 499 is paid in cash to Smith & Ken. For all details of connections and transfers, please visit www.dewa.gov.ae or call +971 3244444.
Can I Lease Out When Complete?
Lease rates will depend on the area of the property, the quality of the building and its facilities, Smith and ken Commercial can advise you on the best strategy in order to secure a suitable tenant at the most favorable terms.
When Should I Sell?
Talk to your Smith & Ken Commercial consultant for an up-to-date market analysis. We have an in-house research department dedicated to following the market trends providing our consultants with an un-comparable insight to the property market allowing them to be able to provide you with accurate expectations and unbiased advice.