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Property Maintenance in the UAE

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The UAE is considered as one of the best place to invest in real estate: instead of taxes on maintenance, rent, sale and inheritance you only pay registration fees, which are most often included in the utilities. Therefore, you do not need to submit annual reports as a foreigner: everything happens automatically. Citizens of other countries can buy, rent and sell residential and commercial real estate in the UAE without restrictions. And it makes no difference-through an individual or a company. How much will you have to spend on a "communal apartment" and are the costs comparable to the income in the Emirates? Read our article.

Real Estate Taxes

There is no mandatory annual property tax in the UAE, but there is an annual fee for the owner. The money goes to the maintenance of the building in which the apartment is located: maintenance of the common area, cleaning and checking the appliences, major repairs, playgrounds, gym, etc. The exact amount is determined by the developer, depending on the area of the apartment and the rates for a particular project.

The average annual rate is $14.6–58.7 per sq.m.

No tax reporting is required: the amount will be deducted from the owner's account automatically. It is worth remembering that in the UAE, payment for the maintenance of the house is made in advance, for a year in advance. And even if the apartment is rented, the owner is the one to pay.

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Utility Services

Service system houses calculate the amount of payment on the basis of meter readings, the rates depend on the number of guests in the apartment people, space and time. The air conditioning system is centralized, and the housing insurance is voluntary.

What other features?

  • The owners conclude contracts for the supply of resources independently, in their own name. If a new building is initially rented out for a long time, most often this issues are solved by tenants.
  • The main items of expenditure are electricity, water, garbage collection and fuel collection. Gas is almost not used in the UAE, mainly electric stoves are used for cooking. The supplier of water and electricity is the Dubai-based DEWA company.
  • 70-80% of Dubai residents are visitors, which is very profitable for the country, since only they pay the water and electricity bills. Citizens of the Emirates (as well as Kuwait and Libya) they are partially exempt from this obligation: their expenses are covered by the state up to a certain extent. The "punishment" for overspending is a full payment for utilities. 
  • Instead of heating (which in the UAE is not necessary even in the coldest period of the year), residents of Dubai pay for air conditioning. Each district has its own centralized cooling system. Such a system is significantly cheaper than individual devices. It is interesting that the condensate, which is formed from such installations in a huge volume, is used for watering common areas.

About expenses

  • The average monthly bill for an apartment of 85 square meters (for two people) is $180 (excluding Internet and house maintenance). The cost of electricity and water starts at $50 per person, and the cost of air conditioning depends on the season and the area: $70-120 when it is particularly hot, $40-70 in winter. For the Internet, you have to pay another $100-120 per month.
  • When it comes to a private house, you should add cleaning of the water tanks ($130-250 per year), gardening and cleaning the pool ($1,000 per year).

The Cost of Living

Revenue. The state does not regulate the minimum and average salaries in the country. But one thing is for sure: foreigners receive 30-40% less than locals with identical education and experience. Seasonal workers and handymen have the lowest incomes. Their income of $300-400 is taken as the minimum. People who have at least some qualifications receive $2,000–2,500.

The average salary is about $4,500. Doctors, lawyers, pharmacists and engineers earn significantly higher than this bar. Office assistants, cashiers, receptionists, bartenders receive at the level of $2,000–2,500. Low-rate jobs usually assume that the employer provides housing, covers the cost of transportation, and partially or completely covers the cost of food.

Also read about how to find a job in the UAE

Housing. To rent a single apartment in the center of Dubai, you need about $1,500–1,600 per month, a three-bedroom - $3,000–3,200. Outside of the center, you have to pay about $1,000–1,100 for a one-bedroom, and $2,100–2,300 for a three-bedroom.

In rented housing, payment is usually made in four checks. The rent for three months is immediately paid. Plus, a deposit of 50-100% of the monthly rate is required upon check-in. Usually, if you pay immediately for six months, the owner offers a good discount.

Meal. Buying food in the UAE is not so expensive: a liter of milk costs $1.6, bread – $1.4, a kilo of rice – $1.9, a dozen eggs – $2.9, a kilo of chicken fillet – $9, beef - $15. A kilogram of fruit usually costs $1.5–2.0, vegetables - $1-2 (we are talking about local products). For a kilo of fish on the market take $7-8. If you eat at home, the average meal will cost $300-400 for two people.

For lunch in an inexpensive cafe, you will give about $10, for a full dinner for two (without alcohol) - $60-70. A combo lunch at McDonald's costs $7.6, but for a cup of cappuccino you will have to pay about $5.

Transport and communication. The cost of a single trip in public transport is $1.5–2.0, depending on the distance. A monthly pass will cost $85. And a kilometer of a taxi ride is about $0.7. A liter of gasoline in the country costs $0.5, a car rental is $400 per month. For mobile communication with the included Internet package, you will have to pay $30-40 per month.

Entertainment. A ticket to the cinema costs $15-17, to the theater - $25-30. A gym membership costs about $80-100.

Renting

Profitability. According to the analytical portal Global Property Guide,  apartment with an area of 120 sq. m in the center of Dubai is available for $710,160 (the average rate per square meter is $5,918). If you rent an apartment for $3 thousand a month, the annual return will be 5.2%.

Bids. We have already discussed the long-term lease above. As for the short-term-good apartments in the center of Dubai rent for $70-80 per night minimum. During the season, the fee may increase by 2.0-2.5 times.

Taxes. Homeowners do not pay tax in Dubai on the income from renting out real estate. But there is a fee of 5% of the rate specified in the contract. This amount is automatically added to the utility bill and paid together with water and electricity to those who actually live in the apartment (for example, the tenant). In the case of commercial real estate, this fee is 10%, but the payment scheme is the same.

Management company. In the Emirates, the function of the management company is usually performed by the developer themself or a representative company. The main functions are the maintenance of housing (including cleaning, furniture cleaning and maintenance) and rental (search for tenants, conclusion of a contract, control of payments and the safety of property, etc.).

Also read: Freehold, Leasehold, Usufruct. The Dictionary of Realty Buyers in the Emirates

Real Estate Sale

Trends. The Dubai market is currently oversupplied. As a result, prices are falling, especially for apartments, the villa segment has more or less stabilized. In 2021, developers want to release fewer projects to actively sell off inventory. However, for example, JLL predicts a further decline in the UAE real estate market.

Taxes. As in the case of rent, there are no taxes on the saling your property, only a fee for registering the property in the register in the amount of 4% of the value, specified in the contract. As a rule, the seller and the buyer divide this amount in half. The fee is paid directly to the Land Registry on the day of the transfer of ownership rights.

 

Quoting conditions of Prian.info materials

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