Property Ownership in Dubai for Nigerian Investors

The real estate sector of Dubai is often regarded as among the most profitable and investment-worthy markets in the world. It draws a significant amount of attention from global investors, a sizable chunk of which comes from African countries.

Dubai offers the ultimate urban lifestyle. As such, a large number of foreign nationalities either buy properties in the city while residing in their own nations or move to Dubai with family for a chance at a more luxurious life.

But, property ownership can be daunting if you are a first-time investor or if you are not aware of the linear and legal steps to follow. This is where we come to your aid. In this space, we are going to give you a quick and comprehensive guide to property ownership in Dubai for Nigerian investors.

From the steps to follow to the documents you need, from the most profitable-worthy investment areas to the mortgage situation, from the types of properties available to the legal protection available to you, we discuss it all here. This is your one-stop guide to everything you need to know before investing in a property in Dubai from Nigeria.

Property Ownership in Dubai

Familiarizing yourself with the procedures of property ownership is crucial to secure a safe deal, especially for those who are doing it from their respective countries, which is what this article focuses on.

The Land Registration Law No. 7 of 2006 in Dubai serves as the primary legislation document that states the laws of property possession in the city. It gives detailed descriptions of who can own and purchase property in Dubai. Foreign nationalities, including Nigerians, have certain limitations to purchasing properties in comparison to the residents of the UAE and GCC (Gulf Cooperation Council) nations.

Types of Properties Nigerians Can Purchase in Dubai

Investing in the real estate market of Dubai is one of the smartest investment options you can make, owing to the high probability of profitable return from it. In Dubai, foreign nationalities, including Nigerians, are eligible to purchase and own two types of properties, each of which gives its owner a distinct type of rights. These are as follows.

Freehold Properties

Freehold properties grant their owners the right to acquire absolute full ownership of the land without any restrictions on time. They get unrestricted use of the land, including leasing and selling of the property.

Leasehold Properties

Leasehold properties give their owners the right to acquire leasehold or usufruct of the land for a limited amount of time that can’t exceed more than 99 years. These properties are usually cheaper and more affordable than their freehold counterparts.

The type of property you want to purchase will completely depend on your goals, needs, requirements, and preferences. If you are aiming to get more financial appreciation from your purchase and long-term security, we recommend opting for a freehold property. However, if your goal is finding a more affordable option that may produce a higher rental return, then a leasehold property might be your best bet.

Designated Areas for Foreign Ownership

When it comes to freehold properties, foreign nationals, including Nigerians, can only own properties in specific designated areas in Dubai. These areas are subject to change from time to time but mostly cover the following areas.

• Palm Jumeirah
• Jumeirah Lake Towers (JLT)
• Dubai Hills Estate
• Dubailand
• Downtown Dubai
• Dubai Marina

Focusing on the Return on Investment (ROI) of any location is important if you are thinking of capital gains and appreciation in the long run. These aforementioned places are also among the areas in Dubai that bring high ROI, making your investment even more profitable.

Steps to Buying Property in Dubai

Nigerian citizens who are looking forward to buying properties in Dubai must go through the following steps to ensure a fair, safe, and legal transaction. Maintaining these steps will safeguard your interests in the future and you can seek help from official authorities in the event of any mishap or mislead from the developer.

Search and Selection of Desired Property

The first order of business is to research property in the real estate market of Dubai. This would involve a series of decisions from your end. You need to set your budget, settle down on the choice of location, and decide what kind of property you want (studio, apartment, penthouse, townhouse, or villa).

Negotiation and Agreement

Irrespective of the mode of payment (cash or mortgage) you are opting for, never shy away from practicing your negotiation skills. This includes the cost of the property, the time frame for payment, and any other allied issues related to the financial health of the property. You can also talk about the maintenance factors to be included in your agreement here. Buying a property directly from a developer leaves you more room for negotiation.

Drafting and Signing of Sales Purchase Agreement (SPA)

The Sales Purchase Agreement (SPA) serves as the primary document to lay out the terms and conditions for your purchase. Take legal advice before drafting this contract and make sure your demands are heard as many future rights will be decided upon the terms and conditions mentioned in it. You need to sign Form F, known as the Memorandum of Understanding (MOU), in many cases that essentially outlines the intentions, roles, and objectives of the deal.

Payment of Deposit

When signing the MOU, you have to pay the security deposit to the Registration Trustee. This is usually 10% of the property cost. Make sure to manage your finances well and maintain a journal for all the expenses involved in the process.

Securing a No Objection Certificate (NOC)

You need to obtain a No Objection Certificate (NOC) from the seller. This document should state that the property you are purchasing is free from any debts or unpaid service fees. This document will also come in handy for obtaining mortgages.

Transfer of Property

To initiate the transfer of property, you need to visit the Dubai Land Department (DLD). You need to present the SPA, NOC, existing title deed, proof of payment, and buyer and seller IDs to DLD. Once the documents are verified, DLD will issue a new title deed in the name of the buyer.

Documents Required from Nigerian Investors for Buying Property in Dubai

Maintaining the following set of documents, in their original form as well as several photocopies, and keeping them handy is important for a smooth transfer of property.

• UAE visa
• Valid passport
• Emirates ID (Applicable for UAE residents)
• No Objection Certificate (NOC)
• Signed SPA or MOU or Form F
• Proof of Address in Nigeria or the UAE
• Manager’s cheque for the property price payable to the seller

Please note that there might be some additional documents other than the aforementioned list that you may be asked for depending on the type of transaction you are involved in. But, mostly these documents should cover the process.

Mortgage Eligibility for Nigerian Investors

Investing in properties requires a huge sum of money. This is not something that everyone can provide for at once. Although cash purchases are popular since they give you better negotiation powers and you don’t have to deal with paying more with the added interest rates, there are other financial avenues for owning a property in Dubai for Nigerians.

Mortgages are considered safe, reliable, and affordable financial options that you can resort to for buying properties in Dubai. With the highly strict laws safeguarding the interests of buyers, mortgages are equally popular with UAE citizens as well as foreign nationals.

Please note that the mortgage eligibility that Nigerian investors have to fulfill will mostly differ depending on the lending institution’s requirements. However, most banks in the UAE can offer Nigerian investors mortgages if they are within the age limit of 21 to 65 years. They also need to maintain a minimum bracket of income sources. Usually, salaried individuals need to maintain at least AED 15,000 while self-employed individuals need to have at least AED 25,000 monthly income.

Most lending institutions prioritize the minimum monthly income figure as it helps them determine the debt-to-income ratio. This is calculated by dividing the total monthly debt obligations by the gross monthly income. The lower the ratio is, the higher your chances of qualifying for a mortgage.

If you have a co-applicant who has a robust financial record (it can be a spouse or relative), it further increases your chances of getting approved for a mortgage. The mortgage laws in the UAE are subject to change. As such, we strongly advise you to speak to a trusted consultant beforehand who is well-versed in the financial and real estate market of both the UAE and Nigeria.

How to Apply for a Mortgage in Dubai?

To apply for a mortgage in Dubai for a property, you need to first scout for a lending institution. A mortgage broker may assist you in finding an apt bank that specializes in providing mortgages to Nigerians who want to invest in properties in Dubai.

Taking legal advice and the assistance of a mortgage broker will help you understand the nuances of the mortgage situation in Dubai. Morevoer, they will assist you in finding the best mortgage arrangement by making better negotiations with the lending institution.

While selecting the type of mortgage, you need to pay attention to the loan amount, the down payment you need to make, and your current financial health. Find out whether a variable or fixed rate mortgage will be better suited for you depending on your situation.

Once you provide the lending institution with all the relevant documents and they are properly verified, you will get a pre-approval letter from the bank. This will state your eligibility and the maximum borrowing amount, which will serve as the base for your property choice.

After you have selected your choice of property, you can complete the loan paperwork with your lending institution or bank. The bank will choose a property evaluator to determine the value of the property and assist you in making a competitive offer. Next, the bank will release the loan fund and provide you with the details of ownership.

Legal Protections for Foreign Investors

The Government of Dubai has put in place several legal protections to safeguard the interests of the buyers. The Real Estate Regulatory Agency (RERA) handles all matters of dispute and their settlements related to the real estate sector in Dubai and you can approach them in time of need. The DLD works in tandem with RERA to improve transparency and protect your rights.

This is why, we recommend you to always be on the right side of the law and go through all the legal proceedings for buying your property. Doing so will make sure DLD and RERA help you out in the future.

Investing in off-plan properties in Dubai is extremely popular. These are properties that are in their developmental stage and are yet to be completed. They offer a myriad of benefits including lower cost, more options for customization, and flexible payment plans, among others. However, many investors often are apprehensive about investing in a property that is yet to be completed.

To give them the confidence and security they need, the escrow account system has been put into place. This is a safekeeping account in which the payments you make are securely deposited and are only released when the agreement set by the buyer and the seller is met.

To Conclude

With the high rental rates, capital gains, tax exemption, and the wide variety of properties, it is no wonder why so many Nigerians are interested in investing in this lucrative real estate industry of Dubai.

With freehold and leasehold properties available in various areas of Dubai, Nigerian investors have plenty of profitable choices in front of them. Not to mention, the availability of mortgage options and the legal protections make buying properties an easy and safe process.

Browsing the real estate market of Dubai and securing a profitable deal for yourself while residing in Nigeria is therefore a seamless process. As long as you are taking legal advice and following the legal rules and proceedings, you are in safe hands.

FAQs

Commonly Asked Questions for Property Ownership in Dubai for Nigerian Investors

Can I visit Dubai to view properties before buying?

Yes, tourist visas are available for Nigerians that they can use to scout the property of their choice and understand the framework of the Dubai real estate market before investing in it.

Are there any tax benefits for Nigerian investors in Dubai?

Yes, there is no taxation on personal income sources in Dubai. The tax-free environment of Dubai attracts many global investors, including Nigerian investors, to the city. However, there are several other charges you need to make such as admin fee, title deed issuance fee, registration fee, etc.

Are mortgage options available in Dubai for Nigerian investors?

Yes, several lending institutions, including top-rated banks, provide lucrative mortgage options for Nigerian investors interested in investing in the real estate market of Dubai.