Buying real estate in the UAE can be quite complex, especially for expatriates and first-time homebuyers. With a different regulatory framework, rules, and jargon applied in the business, having the right terms at hand is crucial to making sound decisions about property. Below is the list of key UAE real estate terms everyone needs to learn before an investment.
1. Freehold Property
Freehold property refers to property in which the property and land upon which the property is situated belongs to the purchaser for life. Freehold acquisition in some areas in the UAE is allowed for both UAE nationals and foreigners with complete rights of ownership.
2. Leasehold Property
Leasehold property is the acquisition of ownership rights for a period of years, usually 99 years, after which the ownership reverts to the original owner. This is common outside freehold regions and usually comes with some usage limitation.
3. RERA (Real Estate Regulatory Agency)
RERA is the regulatory body under Dubai Land Department responsible for overseeing the real estate sector in Dubai. It issues licenses, regulates brokers and developers, and ensures transparency and protection for buyers and investors.
4. Title Deed
A title deed is the official document proving ownership of a property. It is issued by the Dubai Land Department (or relevant authority in other emirates) and is essential for legal property transactions.
5. Mortgage
A mortgage refers to a loan by a bank or financial institution to finance the purchase of property. Expats in UAE can secure mortgages with loan-to-value levels typically up to 75% for first-time buyers, as long as they qualify and their earnings are confirmed.
6. Service Charges
Service charges are annual fees to be paid by property owners to cover maintenance and management of common spaces such as gardens, gyms, swimming pools, and security. The fees vary with the property type and developer.
7. Off-Plan Property
Off-plan property refers to a building in the development or planning phase sold before completion. Off-plan sales generally offer cheaper prices and payment terms but carry risks including delay in the project.
8. Ejari
Ejari is the authorized system to register tenancy contracts in Dubai. It makes the tenancy contract legally valid and secure for both the landlord and the tenant according to UAE rental laws.
9. No Objection Certificate (NOC)
An NOC is a document signed by the developer or homeowners association declaring that the property owner has no dues outstanding and is also in accordance with community rules. It has to be generated during selling or transferring ownership.
10. Capital Appreciation
This refers to the value appreciation of properties with time. Investors often look for areas with high capital appreciation potential in order to realize more returns over the long term.
11. Rental Yield
Annual rental return by a property as a percentage of its price is referred to as rental yield. Dubai typically offers rental yields of 5-8%, thereby making it attractive to investors.
12. Brokerage Commission
This refers to the payment of commission to real estate agents or brokers for facilitating deals on properties. For Dubai, the standard commission would be 2% of the sale price or the annual rent.
13. Strata Title
Strata title is the ownership of individual units in a complex or building, as well as shared co-owning of common areas. It is common in apartments and gated communities.
14. Due Diligence
Due diligence is the act of verifying all the legal, financial, and physical aspects of a property before it is purchased. Due diligence includes inspection of the title deed, reputation of the developer, and terms of the contract.
15. Common Area Maintenance (CAM)
CAM charges are payments made to maintain common areas like corridors, lobbies, and parking in residential or commercial developments.