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When a property is purchased directly from the developer there is
no premium involved, you would just pay the original price, however, the
original price of the property changes depending on how far into
completion stage the property is and how much the demand has
incresed. Premiums kicks in only when the property comes into the
secondary market.
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Transfer Fee is 1% of the selling price if the property is ready to move in.
Transfer fee 1.5% of the original price if the property is not yet
ready and you are planning on selling it.
An investor who is a resident of the UAE can not take out a mortgage on
a property unless they can present a 6 months of banking history in the
UAE. Where as for any brand new resident interested in buying a property has
to pay in full OR present himself as a foreign investor and make
preiodic settlements through foreign bank accounts.
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1. What to by for an investment?
A. Its good to buy something that is under construction mainly in the
initial stages which is pretty much the first couple of weeks directly
from the developers.
2. How long should you hold that investment?
A. You can hold that investment for as long as you can afford to.
There are various options to consider. You can rent that property for
an 8 – 10% return on investment annually. The rule of thumb - 25% of
return on your investment is a good sell. Anything beyond that is
speculating.
3. What is the hidden cost associated with property purchase?
A. Transfer takes about 30 minutes usually, and the charges range
from 1% to 2% from the selling price and with some developers, it's
the original price. Commissions are about 2.5% and that is always
negotiable. And finally Buyers and Sellers normally pay commission to
agents, unlike in other parts of the world.
4. How to calculate mortgage rates?
A. From 6,5% to 7,5% , depending on where you are from the approved
countries on their list, which are mainly the United States, Canada,
Australia, United Kingdom. New Zealand and Germany. For overseas
clients finance companies usually prefer a salaried individual with an
employment history of 2 years minimum.
5. New developments and the risks associated?
A. The market is stabilizing now with premiums on apartments dropping
7% for the first time in 2 years. More phases of the Arabian Ranches
along with the Business Bay and many other developments are being
released, and finally the supply and demand is more constant. Other
than that, there is certain risk associated with developers putting a
condition on your resell until completion date a problem for sort term
investors.
Beware, however, when buying properties where the owners have failed
to meet their payment schedules. It will be impossible to transfer
ownership until all payments have been made, and the service charge
obligations met.
6. Best rental property?
A. Flats / Apartments mainly one bedroom and two bedroom as well as
studio, because of the 8 – 10% return on investment. These days it's a
better option to have villas instead of flats / apartments because of
the high developers listings price and low demand for apartments.
7. How much maintenance fees do developers charge?
A. Maintenance is about 7AED to 18 AED per square feet and it is
usually free for the first year. There are lot of concerns with rising
maintenance fees for flats / apartments and that is one of the reasons
investors or non investors prefer villas, hence the drop in flats /
apartment premiums of 7%. It's always good and smart to get a
agreement interpreted by a lawyer on the terms and condition for
maintenance fees that are usually located on your agreement from. It's
always recommended to get a lawyers advice before you sign such
document which involves millions of AED.
8. Easy financing hassle free, best financial institution to go to?
A. Amlak http://www.amlakfinance.com
9. Documents needed to get a mortgage?
A. Employment letter showing period of employment, salary, and length
of employment. A bank statement for 3 – 6 months showing salary being
credited to your bank account. If you are a business individual, then,
your trade license, and your business bank statement.
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