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Top factors affecting prices of luxury homes

Top factors affecting prices of luxury homes

Luxury apartments in Dubai are in high demand. Prime home prices depend on many aspects, but experts note the current rise in prices is because of an increase in demand. During the lockdown, the real estate market appeared to go sideways. Meanwhile, in 2021, property sales jumped, along with sales of prime homes.

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Benefits of investing in prime property market

The demand is driven by many reasons, including:

  • Affordability. Compared to major cities in Europe and the United States, apartments in Dubai are more affordable.
  • Security of sale and purchase transactions. The process is as transparent as possible.
  • Convenient visa regime. To get a residence visa, it is enough to become a property owner.
  • High resale value. A property can always be sold with a good resale value.

Things you need to know about taxation

There are no taxes on owning a property as well as on income from renting out or reselling. This makes purchasing a residential property an excellent investment. You can rent out your property and get a net profit. The homebuyer is only required to pay a property registration fee, which is about 4 percent of the property value. Many developers offer attractive conditions, including payments in installments or covering part of the amount.

When purchasing a new home, you do not have to pay for the services of intermediaries as you deal directly with the developer. Buying existing properties goes with the payment of a commission to real estate agencies.

Housing cost depends on developers

There are private and public investors in the construction industry in the UAE. Homes built by private developers are cheaper, but they are often less comfortable than properties from state developers. This is because state developers stick to comprehensive development of the region. And if a new skyscraper with elite apartments and penthouses is being erected, then the adjacent territory will be developed too.

Private developers often offer infill construction, such as villas or mansions. However, this may not be very beneficial for large houses in terms of the lack of work on the infrastructure. In addition, it is not always easy to check the reputation of private developers, so it remains to rely on luck. Cost saving can result in a lack of comfort, so it is better to choose trusted developers. You can avoid paying real estate agent’s fees by choosing a property from the developer verified and approved by the DLD.

In terms of security, when buying an object in shared construction, the buyer does not have to worry about the safety of funds. The state provides for a clear scheme of control over non-handed over objects:

  • The buyer transfers the cost of housing to a separate account of the future complex.
  • The state of work is monitored by the Land Department.

Construction of the housing unit must be completed on time, although there is an excusable delay for a period of only 12 months due to the occurrence of force majeure.

Prime locations

There is a determined list of areas in which foreign citizens can become homeowners. Palm Jumeirah remains the most sought-after location. This is a man-made island, palm tree-shaped archipelago, and home to luxury housing. It is one of the most popular tourist destinations. The Dubai Marina area is no less popular. Properties in the Jumeirah Lakes Towers and Jumeirah Village are also a popular choice. The developed infrastructure and proximity to the coast attracts potential owners. Luxury apartments include:

  • modern interior design
  • parking space
  • convenient layout and a sufficient amount of free space.

Residential complexes may have additional bonuses for residents: a swimming pool, tennis court, gym, and sauna.

Factors affecting property prices

The key factors affecting the value of any type of real estate are the general state of the country’s economy and the status of the property. Economic stability and low unemployment keep prices high. Since business in the UAE is rapidly developing, the country's real estate remains an investment attractive for both residents and foreigners.

According to the IMF, UAE economy will experience a 3.5 percent contraction in the first six months of the year. The reason for this is the global pandemic and a decline in oil prices. However, it is most likely that this will not have a negative impact on the real estate market. It has been rising since 2008. And although until 2011 the economic crisis led to a decrease in the value of properties, after that there was slow but steady growth. Over the past six months, more than 80 villas worth over $2 million have been sold in Dubai, as well as 20 homes worth over $20 million. In 2020, only 19 units were sold, which confirms the increase in demand.

The number of rental properties also influences prices. The general plan of the city does not provide for active development in the future, which may lead to supply deficit.

Approximate prices for apartments

Property price depends not only on its size but also on comfort and ​​location. You can find the following listings on the market:

  • Apartments in Meydan One for $200,000.
  • Two-bedroom apartment in residential complex Dubai Healthcare City for $450,000.
  • Apartments in business center Al Barsha South priced at $320,000.
  • Three-bedroom apartment in Sky View Tower, a comfortable complex with a swimming pool, with a price tag of $1.2 million.

Meanwhile, you should be ready to pay $1 million or more for a villa.

Purchase procedure

To reserve your new home, you will need to pay a deposit. It is enough to open a bank account and issue a cheque in the seller's name. If the buyer cancels the deal, the deposit will not be returned. The agreement is signed in English and Arabic. The final payment of the full amount is made to the account of the buyer’s agent, who represents the purchaser's interests in a real estate transaction. The real estate agency receives its commission, which makes up 2 percent of the transaction amount. There is no commission for buying from a developer; the buyer only needs to pay the registration fee. Its value is legally established at 4 percent of the transaction amount.

Payment is possible in cash or through the use of borrowed funds. The mortgage market in the UAE is very competitive, with banks striving to offer favorable conditions.

We are here to help you choose luxury real estate in Dubai

Check out our up-to-date portfolio of properties to get an idea of prices and units available for sale. We cooperate only with credible developers, which is a guarantee of the quality of all the presented apartments and the transaction security. Find your dream home today!

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