The UAE is known to be a global hub for trade and finance that offers a good quality of living. Many dream of settling here for the long term. For them purchasing property makes more financial sense. A recent study by global consultancy Knight Frank showed that prime residential property in Dubai, for example, is more economical than in other major urban destinations, including New York, London, Hong Kong, Paris, Geneva, Tokyo and Mumbai. The report said $1 million (Dh3.67 million) can buy 138 sq m of prime residential property in Dubai as compared to other global centres where only a fifth of the space can be purchased in the same amount.
The most important thing to keep in mind when investing in property is financial stability. Here are the top five things you should consider before buying a home:
1. Investment objective
If you have decided to invest, first ask yourself if you are buying to live in or to rent out. If you are buying for investment, then it will be worthwhile to consider a property that will bring you high returns in the future.
2. Pick a property that fits your pocket
You can finance up to 80 per cent of the property value. A mortgage, with a down payment suiting your budget, should be considered. If you are buying to live in, the same theory of financing applies, but instead of paying rent, you would now be paying towards your mortgage.
Other factors that play an important role in determining whether you should buy on cash or mortgage are age, profession and savings.
3. Location and size
Whether you are buying to live or to rent, price and return on investment (ROI) are dependent on the location and size of the property.
Every property has its own specialty and can be termed as a good investment. In Abu Dhabi, for instance, Maryah Island is a favourite for investment followed by Al Raha Beach, Al Reem Island, Saadiyat Island and Yas Island. In Dubai, Dubai Marina tops the list of the most popular areas to invest followed by Palm Jumeirah, Arabian Ranches, Jumeirah Village Circle and Dubailand.
4. Find a good agent
A real estate agent should be more than a broker, who is able to share a rapport and understand your requirements. Do a quick background check on them online and ask family and friends. When you meet the agent, treat it as an interview where you enquire about their experience, sales history, licensing number and references. Make sure to visit the developer or agent’s office.
5. Cost involved
Once you have decided on the property, these up-front costs will be involved: down payment, Dubai Land Department transfer fees, electricity and water fees, property maintenance charges, mortgage application fees, if required, and broker commission.
Kaizar Patla is the head of consumer assets at ADCB. The views expressed here are his own.