We all know that buying property in Dubai feels like playing a high-stakes game of Monopoly. What we’re also aware of is that calculators, in particular, love Dubai since they have such a great time adding up all those zeroes!
On a more serious note, if you’re looking to purchase property in Dubai, then you have to do some substantial financial planning. And if that real estate is a glamorous AED 1 million property in the bustling metropolis of Dubai, you absolutely need an airtight savings strategy.
So, how much should you save to buy a AED 1 million property in Dubai?
First Things First, Understanding the Basics (Down Payment and Additional Costs)
UAE Central Bank regulations for expatriates make it loud and clear that a down payment of at least 25% is required for properties priced at AED 1 million. In cash, that would be at least AED 250,000. And this is not the only requirement, there are other additional costs.
- 4% (approx.) of the property value as Dubai Land Department Fees.
- 2% (typically) of the purchase price as Real Estate Agent Fees.
- 1-2% of the property value as other miscellaneous costs, which include administrative fees, appraisal fees, and more)
Add them up and your initial Dubai real estate investment comes up to somewhere between AED 340,000 and AED 360,000. It’s the direct cost associated with buying property in Dubai.
Moving on to Building Your Savings
Saving for property in Dubai means having a long-distance relationship with your bank account.
Let’s break down those numbers.
You have to accumulate AED 360,000, right?
Let’s say that you want to purchase the property in the next 5 years. In that case, you will need to save around AED 6,000 per month.
A bit daunting, isn’t it? But there are some effective strategies to approach it:
1. Budget Wisely
Take all your current expenses into account. There must be areas where you can cut back without having to drastically compromise on your lifestyle.
Keep your dream home in mind whenever you need to remind or motivate yourself to save your every dirham.
2. High-Interest Savings Account
One look at Dubai property prices and you’ll jump at the opportunity of placing your savings in a high-interest account.
But if the minimal interest of a traditional savings account does not seem very appealing, explore other better options. For example, mutual funds or fixed deposits, both provide your savings with a much-needed boost.
3. Extra Income Streams
Easier said than done but think about different ways to generate additional income. Consider doing freelance work, renting out a spare room, investing in stocks, etc.
4. Stay Informed
Dubai real estate trends are as dynamic as the Dubai real estate market, so keep an eye out. Dubai property prices can and do fluctuate, you should keep an eye out for that too. These fluctuations are largely dependent on global economic conditions, oil prices, and regulatory changes.
Conduct a thorough Dubai property market analysis. For instance, find out the best areas to buy property in Dubai, understand Dubai housing loan options, etc.
A well-informed buyer is a smart buyer.
How to Buy a Home in Dubai – Beyond the Ordinary Approach
A few eye-opening, fun tidbits about Dubai’s property market that have proved to be effective when saving for a property:
- Early Bird Specials: Some Dubai developers offer better payment terms and discounts to early investors. And you don’t want to miss out on these types of new projects that significantly lower your cost burden.
- Bulk Deals: Many savvy investors band together to build collective buying power. This way, you can negotiate discounts on properties and secure better deals.
- Festival Frenzy: There’s never a shortage of annual shopping festivals in Dubai. During one of these, it’s common to come across developers pitching their limited-time promotions. Such as free furnishings, waived fees, etc. These, no doubt, add substantial value.
You might also, at a buyer’s market, find properties selling at reduced prices. It’s the perfect opportunity to snatch such a high-value piece of real estate at such a marked-down cost!
Be a Real-Life Success Story!
You could be a Lebanese expat saving 35% of your income over a span of 3 years and manage to cover the down payment of your new home. That would make you The Budgeting King!
Or you could be The Side Hustler – a marketing consultant with a passion for photography. So the additional income (from the latter) can expedite your savings and allow you to make a 30% down payment instead of the usual 25%.
Or maybe you’re a financial analyst who uses her expertise to invest in stocks and commodities. A calculated approach here and you’re able to make a 50% down payment! This means fewer mortgage payments and reduced interest rates.
Nobody said that owning a property in Dubai is an easy path. But you can implement smart financial strategies to secure funds and navigate the ever-growing Dubai real estate market more effectively.