Dubai has emerged as a top global destination for property investment from Asia, especially for buyers from Hong Kong.
This city brings not only a high quality of life but also a booming economy, as well as different options for living, either short-term or long-term.
Investing in Dubai real estate has proven to bring in a diversified return portfolio and has generally doubled returns on rent and capital appreciation.
As a foreigner you are allowed to buy property in certain areas across Dubai. The process is relatively straightforward, especially when compared to other major global cities. This guide will take you through a summary of the process of Buying Real Estate In Dubai .
Dubai Real Estate Vs Hong Kong Real Estate
Dubai and Hong Kong are two cities in Asia that are known to be the world’s top financial centers and the most sought-after places for property investment.
They are structurally most attractive because they provide low taxes, business friendliness, political stability, and excellent infrastructure facilities. Nonetheless, several areas exist that need keen attention in investment markets.
Economic Backdrop
Dubai has actively worked to diversify its economy beyond oil and gasoline. The government has invested heavily in sectors like tourism, aviation, real estate, and era. As a result, Dubai’s GDP boom averaged 4% from 2023-24, compared to 2.4% globally.
Hong Kong’s economy has been heavily dependent on economic offerings and buying and selling. The US-China alternate war and COVID-19 impacted it. However, its deep capital markets and strategic area continue to underpin its fame as a worldwide economic center.
Population And Demographic Trends
Dubai’s population has boomed from just 1 Million in 2000 to over 3.3 Million today. It maintains a strong population increase, fueled by an inflow of expats drawn by activity possibilities, tax-loose salaries, and good quality of life.
Hong Kong has a population of 7.5 million. Growth has slowed in current years due to low fertility charges. However, Hong Kong keeps its charm as an international town, attracting expats, mainly from mainland China.
Property Prices
Both cities have seen rapid appreciation in property values over the past decade, fueled by high demand and limited land supply.
In Dubai, prices for prime properties such as villas and apartments in sought-after areas like Downtown Dubai or Palm Jumeirah can range from AED 2,500-4,500/sq ft.
Hong Kong is one of the most expensive real estate property sectors, with home prices ranking just behind Monaco. Luxury home fees in prosperous districts can vary from HKD 60,000- 150,000/sq.feet. According to Numbeo, the average price per square meter in both cities is as follows:
Buy Apartment Price | Dubai | Hong Kong | % Increase From Dubai |
---|---|---|---|
Price per Square Meter to Buy an Apartment in City Centre | 19,448.32 AED(41,439.56 HK$) | 104,094.66 AED(221,799.97 HK$) | +435.2 % |
Price per Square Meter to Buy an Apartment Outside of Centre | 10,727.81 AED(22,858.31 HK$) | 68,727.07 AED(146,440.40 HK$)) | +540.6 % |
The high prices in Hong Kong are exacerbated by its challenging geography, scarcity of developable land, and popularity among mainland Chinese buyers.
Transaction Costs
Dubai has relatively reasonable acquisition costs. For foreigners buying property in Dubai, the main expenses are:
Fees | Amount |
---|---|
DLD fee | 4% plus- AED 580 for apartments and offices- AED 430 for land – AED 40 for off-plan |
Property registration fee | For units priced below AED 500K: AED 2KFor units priced above AED 500K: AED 4K |
Title Deed | AED 250 |
Real estate agent fees | 2% of the property cost |
VAT | 5% (applies to property registration and real estate agent fees) |
Total transaction costs range from 6-10% of property value.
In contrast, buying costs in Hong Kong can be as high as 15-20%, thanks to hefty stamp duties and taxes. Here are the detailed costs associated with a Hong Kong property.
Fees | Amount |
---|---|
Property registration fee | Below AED 2.7M Transaction: AED 845Over AED 2.7M Transaction: AED 1.6K |
Agent fees | 1% of the property value |
Ad Valorem Stamp Tax | 15% of the property value |
Special Stamp Duty | Property owned for 6 months or less: 20 % of the sale price Owned for 6 to 12 months – 15 %Owned for 12 to 36 months – 10 % of the sale price Owned for 36 months or more – 0 % |
BSD – Buyer’s Stamp Duty | 15% |
As a result, acquisition costs in Hong Kong are significantly higher.
For example, let’s say you are going to buy an apartment worth AED 1,000,000) and retain ownership for 12 months. Let’s compare how much it will cost in total in Dubai versus in Hong Kong:
Fees | Dubai | Hong Kong |
---|---|---|
Property Value | AED 1,000,000 | AED 1,000,000 |
DLD fee | AED 40,000 (4%) | N/A |
Property Registration fee | AED 2,000 | AED 845 |
Title Deed | AED 250 | N/A |
Real Estate Agent Fees | AED 20,000 (2%) | AED 10,000 (1%) |
VAT | AED 1,000 (5% of fees) | N/A |
Property registration fee (total) | AED 2,000 | AED 845 |
Ad Valorem Stamp Tax | N/A | AED 150,000 (15%) |
Special Stamp Duty | N/A | AED 100,000 (10%) |
BSD | N/A | AED 150,000 (15%) |
Total transaction costs | AED 63,250 | AED 410,845 |
Rental Yields
Dubai offers some of the highest rental yields globally, averaging 5-10% annually across both apartments and villas. A steadily growing expatriate workforce supports rental demand. According to numbeo, general rents of these two cities are as follows.
Property Type | Location | Dubai Rent (AED) | Hong Kong Rent (AED) | % Difference |
---|---|---|---|---|
1 Bedroom Apartment | City Centre | 7,932.95 (16,903.15 HK$ | 8,355.09 (17,802.63 HK$) | +5.3% |
1 Bedroom Apartment | Outside Centre | 4,775.53 (10,175.48 HK$) | 5,891.17 (12,552.63 HK$) | +23.4% |
3 Bedroom Apartment | City Centre | 15,204.15 (32,396.29 HK$) | 17,277.60 (36,814.29 HK$ | +13.6% |
3 Bedroom Apartment | Outside Centre | 10,520.44 (22,416.46 HK$) | 11,547.98 (24,605.88 HK$) | +9.8% |
Hong Kong’s rental returns are more modest at 2-5%. However, its prime location ensures reliable tenant demand. Most expats prefer to rent due to the high cost of buying.
Regulations and Visas
Dubai allows foreigners to purchase freehold property without restrictions. It offers renewable 5 and 10 year residency visas to those spending over AED 750,000 (US$200,000) and AED 5 million (US$1.4 million) on real estate, respectively.
In Hong Kong, non-residents can buy property but must pay significantly higher stamp duties. The city does not offer direct real estate investment routes to residency or citizenship.
Financing
Mortgage rates in Dubai average 2-3% for expats or nationals, making financing highly attractive. Up to 80% LTV is available, depending on income.
Hong Kong also offers low mortgage rates of around 2%, but the maximum LTV is typically 50-60%. Rules have been tightened recently to curb speculative borrowing.
Taxes
In Dubai, there are no capital gains taxes. This makes net rental yields very attractive for investors.
Hong Kong only taxes rental income, not capital gains or other income. The rental tax rate is 15% of the assessed rental value.
Political And Economic Stability
Dubai offers a stable pro-business environment, minimal red tape, and political continuity. Recent reforms have further boosted its appeal for foreign firms and workers.
Hong Kong has faced uncertainty due to the 2019 protests and China’s increased control. However, its independent judiciary and civil service continue to underpin its reputation.
Key Risks
In Dubai, potential risks include oversupply in off-plan properties or more restrictive visa rules. But new initiatives like the expansion of the 10-year Golden Visa help mitigate such risks.
Hong Kong faces risks from both local political tensions and external geopolitical issues. Near-term economic weakness may impact prices, but long term fundamentals remain robust.
Both cities offer compelling, low-tax environments for real estate investors. However, Dubai currently has the edge in areas like prices, yields, and government incentives.
Why Dubai is a Top Property Investment Destination?
Here are some of the key advantages that make Dubai a top global real estate investment destination:
- Strong legal framework – Clear property ownership laws for foreigners with Title Deed issuance
- Zero taxes – No capital gains, income or inheritance taxes in Dubai Stable currency – UAE Dirham is pegged to the US Dollar lending stability
- High rental yields – Gross yields of 5% to 10% on apartments possible for investors
- Capital appreciation – Property values have steadily increased over the past decade
- Infrastructure upgrades – Ongoing investments in transport and community facilities
- Lifestyle appeal – World-class amenities and facilities attract expat residents and visitors
- Visa incentives – Generous residency visas linked to property purchase
- Ease of repatriation – No restrictions on foreign exchange or repatriation of sale proceeds Combine these advantages with Dubai’s track record of safeguarding real estate ownership rights and it is easy to see why it ranks as one of the best cities worldwide for property investment.
The Process of Buying Property In Dubai From Hongkong
As you already know why, Dubai is superior to Hong Kong in terms of real estate property; let’s understand the process of buying property in Dubai from Hong Kong.
Types of Property
There are three main property types that foreigners can purchase in Dubai:
Freehold Properties
Freehold properties allow foreigners full ownership rights. They can be rented out, sold, or inherited without restriction. Freehold properties are commonly undeveloped plots of land, allowing owners to build their desired property. Since the owner has full ownership rights, freehold properties require less paperwork and no consent from the state. Here are some of the top freehold areas in Dubai:
- Business Bay
- Downtown Dubai
- Barsha Heights
- Jumeirah Beach Residence
- Jumeirah Lake Towers
- Dubai Marina
- DAMAC Hills
- Palm Jumeirah
- Dubai Studio City
- Jumeirah Park
- Dubailand
- Al Barari
- Dubai Sports City
- Dubai Production City
- Dubai Motor City
- The Greens
- Arabian Ranches
- Emirates Hills
- Dubai South
Commonhold Properties
Commonhold properties are also purchased in Dubai. It includes apartments, condominiums, and non-residential units within a building. Owners have the right to buy, sell, or rent out commonhold properties. However, owners must pay fees for the maintenance of common areas. Property developers typically own commonhold buildings.
Usufruct Properties
Usufruct properties involve long-term leases, usually 30 to 100 years. Occupants do not have ownership rights and cannot make changes to the property. Usufruct leases provide occupancy rights without full ownership.
Finding the Right Property
The first step is identifying potential properties that match your requirements, preferences, and budget.
Defining your needs
Think about key things like:
Purpose of buying – own use, investment or both
Type of property – apartment, villa, townhouse, land plot etc.
Number of bedrooms and bathrooms
Location – proximity to work, amenities, schools etc.
Budget – factor in all purchase and post-handover costs
Facilities – parking, amenities, views etc.
Also decide if you want a ready property or are open to off-plan purchases. Ready units involve lower risks but may have higher prices. Off-plan units will be cheaper but involve completion risk.
Researching areas and prices
Once your parameters are set, research different areas in Dubai to identify promising locations. Analyze sale prices using online listings like Properstar to gauge affordability.
Some popular areas for expats include Downtown Dubai Dubai Marina , Palm Jumeirah , Arabian Ranches , Jumeirah Village Circle etc. Prices vary based on factors like location, developer, age of property, facilities etc.
Shortlisting properties
Search online listing sites like Top Luxury Property to shortlist properties matching your criteria. Guides like Properstar’s Dubai Neighborhoods section can help shortlist suitable areas.
You can also inform real estate agents about your requirements so they can suggest options. Participate in property viewings to further filter down units based on physical site visits.
Making An Offer On The Property
Once you zero in on a property, the next step is placing an offer and negotiating the purchase terms.
Confirm ownership
Run checks on ownership title and liens before making an offer, especially for resale properties. Verify there are no pending payments or disputes.
Make A Tentative Offer
Submit a written offer letter to seller/agent mentioning proposed price, payment plan, and intent to do due diligence. Include token deposit amount refundable if deal falls through.
Negotiate price
Be prepared to negotiate, usually 5-10% below asking price. Expect counter-offers from the seller before agreeing on the final sale price. Compared to recent sale prices in the community.
Sign Intent Agreement
Upon price agreement, sign a Memorandum of Understanding (MoU) or Agreement of Sale stating agreed terms and payment schedule. This also freezes the price.
For Off-plan Properties
The off-plan properties registration process takes place at the developer’s office and a certificate of ownership, called ‘oqoodi’ is issued in the buyer’s name. DLD fees, such as the 4% transfer fee and administration costs will apply for off-plan purchases as well.
Submit Downpayment
Along with MoU, pay the seller an initial down payment, typically 10% of property value. This will be adjusted in final payments.
Conducting Due Diligence
Before proceeding further, conduct thorough due diligence on the shortlisted property.
Verify Ownership And Title
Do an official title deed check to ensure clean ownership without disputes or liens. Get a copy of the title deed from the seller.
Check Payment Plan
Review payment schedule, handover date, penalties etc. outlined by developer for off-plan purchases. Understand all terms before signing any contract. Top payment plans in Dubai is as follow:
- 70/30 Payment Plan
- 40/60 Payment Plan
- 80/20 Payment Plan
- 50/50 Payment Plan
- 10/90 Payment Plan
- Post-Handover Payment Plan
- RTO Payment Plan
- 1% Payment Plan
Assess Developer Reputation
For off-plan purchases especially, research the developer’s reputation and track record of timely delivery. Avoid newer developers with no proven projects.
Inspect site conditions
Visit site to check stage of construction progress for off-plan purchases. Ensure it matches with claimed progress in documents.
Assess Surrounding Infrastructure
See if the community has easy access to transportation links, amenities, utilities connections etc. Drive around during peak hours to gauge traffic.
Get Property Valued
Hire a RICS-certified surveyor to assess the property’s fair market value. Compare this price against the agreed sale price.
Arranging Financing
If you require mortgage financing to complete purchases in Dubai, follow these.
Mortgage Pre-Approval
Before making an offer, get pre-approval from banks like HSBC or ENBD so you know your budget limit. The main eligibility criteria are:
- Minimum salary of AED 10,000 per month
- At least 1-year employment contract in the UAE
- Minimum down payment of 20% to 30%
- Age limit of 65 years at the end of tenure
Down Payment Funds
Arrange for down payment funds to be transferred to Dubai. You will need 20-30% of property value, depending on the bank.
Documents For Loan Application
Keep ready documents like salary certificates, employment contracts, bank statements etc. needed for the loan application.
Compare Mortgage Rates
Shop around to compare home loan rates, fees and features across banks. Choose the lender offering the best deal.
Mortgage Application Process
Submit loan application to the bank along with the required documents. It takes 4-6 weeks for loan approval and disbursal.
Completing Purchase Formalities
There are several legal formalities to be completed before getting possession of the property.
Registration Appointment
Book appointment for final registration of property transfer at Dubai Land Department (DLD).
Title Deed Transfer
Attend final registration along with seller and agents. Submit original title deed, required NOCs and other paperwork.
Clear Payments
Make all pending payments for the property in the name of the seller via manager’s cheque. This includes DLD fees.
Obtain Title Deed
DLD will verify all documents, register the sale, and issue the new Title Deed under your name.
Post-Registration Steps
Apply for DEWA connection, facilities management, building insurance etc. Complete visa formalities if applicable.
Property Handover
Once registration is done, the developer will hand over possession of ready units or purchase confirmation for off-plan properties.
Working With Real Estate Agents
Hiring a regulated real estate agent for the entire buying process can make it much smoother for overseas investors.
Local Expertise
Agents will have extensive knowledge about communities, pricing, and Dubai’s property market. They can suggest suitable options as per your needs.
Transaction Efficiency
A good agent will manage property visits, paperwork, negotiations with sellers/developers, mortgage coordination etc. efficiently.
Due Diligence Support
Agents can assist with title deed verification, evaluating developer reputation, checking infrastructure etc.
Documentation
Experienced agents are familiar with all the documentation needed for DLD registration, loan applications etc.
No Added Fees
The seller pays the brokerage commission of 2%, so hiring an agent does not increase purchase costs for the buyer.
Post-sales support
Agents provide support related to visas, handling rentals, property management etc. even after sale completion. Therefore, having an experienced real estate advisor makes the buying experience much easier for foreigners and investors. Do your research to find reputable agents registered under RERA.
Required Documentation
- Documents required to buy property in Dubai include:
- Passport: Valid for at least six months
- Visa: Not required to purchase property
- Sale contract: Known as Form F/MOU, this is one of the Dubai Real Estate Regulatory Authority’s (RERA) real estate forms
- No Objection Certificate (NOC): From the DLD
- Proof of payment: Including bank statements
- Original title deed: The only document that proves property ownership in Dubai
- Property details: Including the possession date, payment plan, specifications, terms and conditions, common areas, and facilities
- Identity proof of the seller: Such as a trade license, memorandum of association, or partnership agreement.
Timeline for Purchase Completion
The average time to complete a property purchase in Dubai, from the date of the Sale Purchase Agreement (SPA) signing, is around 30 days. However, the process can take between two and four months, depending on several factors, including:
- Time of year
- Type of buyer
- Property Search
- Negotiations
- Financing
- Legal procedures Therefore, factor in around 3-4 months from start to finish for the entire buying process if all goes smoothly. Delays can occur so keep some timeline buffers.
Key Takeaways
Dubai offers an open, stable and lucrative real estate market for Hong Kong investors. Its urban lifestyle, tax benefits, infrastructure and growing economy provide solid underpinnings for property demand.
Follow prudent approaches – extensive due diligence, reliable advisors, fair valuations and risk mitigation – when searching for units. Areas like Downtown, Palm Jumeirah, Dubai Marina and Arabian Ranches present attractive options.
Budget for ownership costs like DLD transfer fees and post-purchase expenses. Hiring a regulated real estate agent can streamline the buying process seamlessly as an overseas investor.
Consider prevailing market trends and talk to experts to time your entry and purchase at the right price points. Hold a long-term view on Dubai’s growth potential for optimal returns from property investment.