Secondary Property Market in Dubai: Guide

The UAE’s secondary property market is attracting more and more non-resident investors and expats who shift their focus from off-plan developments to secondary housing. Currently, non-residents make up 42% of all new investors.

In 2023, the Dubai Land Department (DLD) recorded 166,400 residential transactions. In both 2023 and 2024, the secondary property market has experienced increased demand and rising prices. It accounted for 41% of the total number of sales in 2023. Areas with the most transactions were Business Bay, Downtown, and Jumeirah Village Circle.

The latest data for Q2 2024 shows that secondary housing deals dominate in the villa and townhouse segment.

The positive market dynamics are due to favorable economic conditions, demographic trends, and the Emirate’s policies. A noteworthy part of the demographic aspect is Dubai’s increasing population. Considering its growth, we can expect that the market will continue to flourish in 2024 and 2025, driven by the rising rental yields and number of expatriates.

Advantages of Secondary Property in Dubai

• Move-In Ready
  Buyers can move into a secondary property right away, avoiding the long waiting period typical of off-plan projects.It’s worth noting that property at the construction stage, however legally bound, involves risks. These include construction workers’ deficits, material supply issues, and delays in handing over the keys. On the contrary, the secondary property allows you to move in at once.

  Unlike an apartment or a house under construction, the secondary property brings investors rental income right after purchase. This aspect of secondary property appeals to investors looking for immediate rental income from Dubai’s tourists.

• Inspecting the Apartment or House
  Stemming from the intrinsic feature of the unit’s readiness, this benefit lets you inspect the property personally. You can visualize potential rearrangements, assess street noise from the windows, and test the appliances.Nothing is more valuable (and satisfying) than walking through the rooms and examining the property you intend to buy.
• Established Communities
  Secondary properties are often located in established neighborhoods with functioning amenities. This increases the comfort of living and the chances of a profitable rental.These neighborhoods offer excellent connectivity to major roads and access to public transport. They allow easy commutes to work, the waterfront, or airports. In particular, being near key business districts such as Downtown Dubai and Dubai Marina increases the community’s attractiveness.

  Residents in developed areas enjoy a range of amenities that fit all tastes and needs. These include shopping centers, supermarkets, schools, kindergartens, medical facilities, parks, and recreation areas.

  All in all, established neighborhoods typically have a robust service sector, unlike newly completed areas.

• Stable Rental Yields
  Properties in developed communities are in constant demand. So, secondary housing tends to offer higher rents compared to off-plan properties.
  Overall, rental income in the secondary market is more stable and predictable.Secondary housing rental yields in Dubai can range from 6 to 8% depending on location and property type. Secondary properties are ideal for those who prioritize passive income and are not too concerned about long-term capital appreciation.

  Here are some stats: In Q2 2024, there were 164 contracts for luxury property rentals with an annual fee of AED 1 million ($270,000) and more. Villas and townhouses made up 60% of these deals. This shows a preference for spacious, detached rental homes. The secondary property rentals have been especially prevalent in Palm Jebel Ali and Palm Jumeirah.

Disadvantages

• Possible Maintenance Issues
  Buyers might face additional costs for maintenance, renovation, or repairs of secondary properties post-purchase.A tip to consider: Homeowners in Dubai may hire a contractor offering comprehensive maintenance solutions. These contracts cost from AED 1,500 ($408) to AED 6,000 ($1,633) per year, depending on the services included.
• Potential for Market Saturation
  Handover of new development projects may lead to oversupply in certain areas, affecting the competitiveness of the apartment or house for rent.The risk of oversupply is lower in established neighborhoods, and demand for rental units remains steady.
• Higher Costs
  Off-plan realty in Dubai is generally more affordable than secondary property.Properties under construction are 10-20% cheaper than similar secondary properties. This price advantage is due to developers’ discounts and incentives to encourage early buyers, luring those seeking lower initial costs. In addition, developers offer convenient interest-free installment schemes for non-residents.

  However, there are cases when the secondary property is more affordable than a new unit. In this case, the buyer needs to make sure that the sale is legally clean. Due diligence, verifying the seller and the unit itself, and legal consultation are a must.

What Affects the Unit’s Price

The UAE’s economic growth is forecast to reach 4.2% by 2025. Taking into account the current market stability and high demand, one can predict that housing prices will continue to grow.

Together, the residential project type, location, and plans for the beautification of nearby urbanscape affect the property cost.

Fluctuations in interest rates can also influence purchasing power and overall market activity.

Also, reforms to residence permits and government incentives for foreign investment may make the market more attractive and, as a result, affect the price dynamics.

How to Buy Secondary Property in Dubai: Step-by-Step

• Determine the type of property for purchase (apartment, penthouse, duplex, villa) and your budget.
• Thoroughly research the neighborhoods, their infrastructure, and secondary property market trends.
• If you are considering co-financing options, familiarize yourself with the mortgage process in the UAE. It’s best to visit several banks or send a notarized proxy with your request.
• Schedule viewings to personally assess the property, its state of repair, furnishing, and comfort level.
• Discuss the terms of the Sales and Purchase Agreement (SPA) with the seller.
• Check the documents and get legal advice to make sure everything is in order, first of all, the legal status of the property. There should be no debts, liens, or disputes.
• Attend the Dubai Land Department (DLD) to close the deal, paying all fees and taxes.
• Obtain a certificate of property ownership (title deed).
• DLD recognizes the buyer’s ownership rights once the payment and registration process is complete. At the same time, it updates the records to reflect the change of the owner and issues a certificate of ownership.
  This document serves as legal proof of your owning the property. It has details of the purchased property, including its location, square footage, and the owner’s info.

Costs When Purchasing Property in Dubai

As a buyer, you must pay the seller the price of the property. If you secure a mortgage, the bank will handle the payment to the seller, but you will need to cover mortgage closing costs. Now, let’s go through the organizational fees for DLD transactions:

• The registration fee is paid by both parties. Buyer and seller pay 2% each of the value of the property (totaling 4%).
• If the value of the property is AED 500,000 (about $136,130 at the moment of the article’s publication) or more, DLD will charge you a partner fee of AED 4,000 ($1,089) + VAT. If the sale value is less than AED 500,000, the fee will be AED 2,000 ($544) + VAT.
• Upon transferring the ownership rights, DLD issues a title deed in the buyer’s name. The fee for issuing the certificate is 250 AED ($68).

Tax and Legal Aspects

Dubai does not levy property tax, which makes it an attractive place to invest money and buy a home. Let’s specify: In Dubai, there is no monthly or annual property tax and no capital gain tax on the property’s sale, regardless of how long the seller has owned it and how much capital it has appreciated.

If you are buying property in Dubai for the first time, the concept of a freehold zone may not be familiar to you. This term refers to areas where foreigners can buy property with full, unrestricted ownership.

We recommend hiring a legal expert in UAE property laws before the deal. They can guide you through the purchase process and ensure it’s legally sound.

5 Extra Tips from Top Address

• Study the real estate market to keep abreast of its trends and value dynamics. Reading overviews from renowned investment, insurance, economy, and realty companies, you will understand the market and navigate it with greater confidence.
• When you decide to see the apartment or villa in person, inspect it closely. Check the bathroom and potentially problematic systems or features, such as HVAC and noise insulation. By inspecting the property with a property, renovation, or finishing expert, you can identify problems that the seller wants to hide or is unaware of. These may include plumbing issues, electrical faults, or structural damage.
• It’s useful to study the planned landscaping projects and renovations in the area. These can increase the comfort of life and the cost of the rent. Also, the price for the unit may jump if the construction of a subway station or a tourist spot is announced.
• Be prepared to negotiate. In the UAE, negotiation is a routine part of the process. To get a good deal, take someone with you who is skilled at dealing with people.
• Don’t be afraid to engage a real estate agency. By working with an agent who understands the secondary property market, you’ll secure your rights and finances and speed up the purchase. You’ll also own a home or investment property that meets your needs to a T.

Share your contact details in the chat or reach out to us so we can align your needs, goals, and budget, whether it’s a studio, two-bedroom apartment, or townhouse in Dubai, and facilitate a smooth purchase.