Important Real Estate Terms in Dubai
Whether you are buying, renting, or investing in real estate in Dubai, understanding key terms is essential for making informed decisions. In this article, we explain the most important real estate terms in Dubai to help you navigate the market confidently.
Important Real Estate Terms in Dubai You Should Know
1. Ownership & Property Types
Freehold
A freehold property allows foreigners to own both the unit and the land indefinitely. The owner has the right to sell, lease, or inherit the property without any time restrictions.
Leasehold
Leasehold ownership refers to a fixed term, typically ranging from 10 to 99 years. After the lease term ends, ownership of the property reverts back to the landowner.
Title Deed
The title deed is an official document issued by the Dubai Land Department (DLD) that serves as proof of property ownership. It is essential for property transactions and transfers.
Oqood
Oqood is a system that registers contracts for off-plan properties before the title deed is issued. This ensures that both the developer and the buyer are protected legally during the construction phase.
2. Buying & Selling Terms
Off-Plan Property
An off-plan property is one that is purchased before construction is completed. Typically, these properties are sold at a lower price with flexible payment plans, offering buyers an opportunity to invest early.
Ready Property
A ready property refers to a fully constructed property that is ready for occupancy or rental, offering immediate returns for investors.
Down Payment
The down payment is the initial upfront payment made by the buyer when purchasing a property. It typically ranges from 10% to 20% of the total price.
Payment Plan
A payment plan is a structured installment agreement between the buyer and developer. Common payment plans include options like 50/50 or 60/40, where a portion of the property price is paid upfront, and the rest is paid in installments.
Post-Handover Payment Plan
A post-handover payment plan allows buyers to pay part of the property price after the handover of the property, sometimes extending the payment period for several years.
3. Mortgage & Financing Terms
Mortgage
A mortgage is a loan provided by a bank or financial institution to finance a property purchase. The property itself serves as collateral.
LTV (Loan-to-Value Ratio)
The LTV ratio is the percentage of the property’s price that the bank will finance. For residents, the LTV ratio can be as high as 80%, while for foreigners, it may be up to 50%.
Pre-Approval
Pre-approval is a confirmation from a bank indicating the amount a buyer is eligible to borrow for a mortgage, making it easier to plan the purchase.
Interest Rate
The interest rate is the percentage charged by the lender for borrowing the money. This rate impacts the overall cost of the mortgage.
4. Rental & Investment Terms
ROI (Return on Investment)
ROI refers to the annual rental income as a percentage of the property’s purchase price. In Dubai, ROI typically ranges between 5% to 10% annually, depending on location and property type.
Gross Yield
Gross yield is the total rental income as a percentage of the property’s purchase price before deducting expenses.
Net Yield
Net yield is the rental income after deducting all expenses, such as maintenance, management fees, and service charges.
Ejari
Ejari is a government system that registers tenancy contracts in Dubai, ensuring transparency and legal protection for both tenants and landlords.
Security Deposit
A security deposit is a refundable amount paid by the tenant as a guarantee against potential damages to the property during the lease term.
Chiller Free
Chiller free indicates that the landlord covers the costs of central air conditioning, which can significantly reduce the tenant’s electricity bill.
5. Developer & Project Terms
Master Developer
A master developer is a company responsible for developing large-scale communities and infrastructure. Well-known master developers in Dubai include Emaar, Damac, and Nakheel.
Sub-Developer
A sub-developer is a company that develops specific projects within a master community. Examples include Meraas and Azizi.
Handover
Handover refers to the official transfer of a completed property from the developer to the buyer. This process typically includes an inspection of the property to ensure it is defect-free.
Snagging
Snagging is the process of inspecting a newly completed property to identify any defects or necessary repairs before the handover.
Service Charges
Service charges are annual fees paid to property management companies for maintaining and operating services like cleaning, security, and landscaping.
6. Popular Locations & Communities
Downtown Dubai
Downtown Dubai is home to iconic landmarks like the Burj Khalifa and Dubai Mall, making it one of the most desirable areas for both residential and commercial properties.
Business Bay
A commercial and residential hub near Downtown Dubai, Business Bay is known for its office spaces and luxury apartments.
Dubai Marina
Dubai Marina is a prime waterfront location with luxurious apartments and hotels, attracting both residents and tourists.
Palm Jumeirah
Palm Jumeirah is a man-made island offering high-end villas, apartments, and beachfront properties, making it one of the most prestigious locations in Dubai.
JVC (Jumeirah Village Circle)
JVC is a growing residential community known for its affordable housing and high rental yields, making it an attractive area for investors.
Dubai Creek Harbour
A new mega-project by Emaar, Dubai Creek Harbour is set to feature the Dubai Creek Tower, the world’s tallest tower, and is expected to be a major investment hub.
Conclusion
Understanding these key real estate terms will empower you to make more informed decisions whether you’re buying, renting, or investing in Dubai’s lucrative property market. For the best real estate opportunities in Dubai, contact Aqua Home, one of the top real estate companies in the city!
