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How to Buy Freehold Property in Dubai
The basics of buying freehold property in Dubai are the same as anywhere else: One needs to be very careful and exercise due diligence. Buying property that is financed by a well known bank is almost always safer, because the bank does its own verification of the title and other incidents of the property. The first step, of course, is to find a registered broker who has acceptable Real Estate on hand and appoint a buying agent.
Areas Where Non-Locals Can Buy Freehold Property in Dubai
By law, non-locals are allowed to hold or purchase freehold property only in certain plots or areas as specified by Regulation No.3 of 2006 of the Government of Dubai. The law says that non-locals may own freehold property in Dubai not limited by time, or may have the usufruct right or hire right for a period not exceeding 99 years in 23 areas mentioned under the regulation. Non-locals may not hold freehold property in Nad Al Shiba Area, Plot No. 224, but may hold leases up to 99 years.
The 23 areas where non-locals may purchase freehold property in Dubai include Um Hurari II, Barsha South II, Barsha Sout III, Emirates Hills I, II & III, Jabal Ali, Al Jaddaf, World Islands, Ras Al Khour, Al Rawiya, Sheikh Zayed Road, Al Safouh I & II, Al Qouz III, Industrial Qouz II & III, Mardiff, Marsa Dubai, Jabal Ali Palm, Jumeira Palm, Nad Al Shiba, and Warsan I. The particular plot numbers in each area that offers freehold property in Dubai for purchase by non-locals are mentioned in the Regulation.
Buyer's Agent Agreement by RERA, Form B
The Buyer's Agent Agreement, Form B, embodies the principles of choosing freehold property in Dubai. First, you need to decide whether you want to invest in property under construction or to be constructed. Such a property is termed as "off plan" property in Dubai. Real Estate that are already completed and possession ready or given is called "secondary market" property.
Next, you need to determine and state your budget and the time frame by which you want possession. Property in Dubai is available in principally five types or categories: vacant land, Villa, Building, Apartment, and Townhouse. Other specifications including number of bedrooms, number of bathrooms, car garage, and any other special requirements need to be decided and spelt out.
The buyer of freehold property also needs to decide and notify whether property deposit is ready or not, whether the buyer requires finance or not, whether finance is pre-approved or not, whether the property is investment property, owner occupied property, residential, commercial, or industrial.
Though registered brokers are usually honest, one needs to remember never to pay any part of consideration money without having a registered sale agreement. If you are buying "off plan" then the money should be paid into a RERA approved trust account and both the cheque and the receipt should be in the name of the project and not in the name of any individual or company. It is also good to keep in mind that only the Dubai land department can charge fees on property transfer, and according to law no seller or developer can charge any transfer fee for freehold property in Dubai.
Dubai real estate prices may suffer a fall this year bringing prime property within the reaches of many, but will start moving up before the year is out. On May 17, Bloomberg Business Week reported Bank of America Merrill Lynch having said prices of centrally located property in Dubai will settle down after the recent price drop of nearly 45 percent. Experts predict that prices of residential property in Dubai may fall another 15% before stabilizing. Dubai based analysts have suggested investors that prime assets may soon reach a floor. If we couple these news with that of the IIF expecting an average economic growth of 4.4 percent in the Gulf region this year, then it is safe to assume Dubai real estate prices will hit the floor and swing around in 2010 itself.
The recent crash in Dubai real estate
According to industry reports, most property projects in Dubai suffered a setback following the global credit crisis. The inevitable result was crashing of real estate prices and defaults on payments. The setback of the market economy was closely followed by completion of a wave of constructions that saw supply exceed demand in Dubai real estate.
Another big reason for the dip in Dubai real estate prices were troubles facing the government-owned holding company, Dubai World. The slowing of infrastructure development led by Dubai World affected the entire market and most industries, with real estate being no exception. According to recent reports of the IIF, the turnaround of Dubai's economy will only happen if Dubai World manages to sort out differences that remain with creditors.
Things have started looking up
The good news is that the real estate scene in Dubai is not as bleak as last year. Dubai Holding, also owned by the government, has already begun financial restructuring. If that is any indication of the efforts of the government, Dubai World, may well be giving finishing touches to its own $25 billion restructuring. In fact, according to news reported by Al Bayan on May 17, a government owned real estate company has already reopened projects put on hold and is seeking to restructure $ 10.5 billion of the debt restructuring of Dubai World.
It's the best time to buy Dubai real estate
Experts are sure that migration within the United Arab Emirates will see residential property in Dubai real estate get back in shape. However, it may still take some time for prices to reach the floor. There is still significant over supply of property in the market and the meager 2% rise in real estate prices that happened in the first quarter of 2010 can find it hard to maintain the upward trend. This is especially in face of the fact that a large number of new finished Real Estate are going to enter the Dubai real estate market with projects scheduled to complete by the end of the year.
To sum up, it is safe to say that for any person thinking of buying property in Dubai at bargain rates, 2010 may be "now or never," for prices of Dubai real estate will never be lower again.