Dubai is one of the most attractive destinations for property investors, thanks to its high-quality infrastructure, diverse lifestyle, and stable economy. However, buying a property in Dubai is not as easy as it may seem. You need to meet certain criteria, such as having a minimum salary, a down payment, and a mortgage approval. In this blog post, we will explain how to calculate the minimum salary required to buy a property in Dubai, and what factors affect it.
Why Invest in Dubai Property?
Dubai is a global city that offers a range of benefits for property buyers, such as:
- High rental yields: The average rental yield in Dubai was 6.2% in 2022, which is higher than many other cities in the world.
- Capital appreciation: Dubai property prices have been increasing steadily over the past year, as the demand for residential units has exceeded the supply. According to CBRE, the average residential property prices increased by 10.9% in the year to May 2022, with apartment prices rising 9.6% and villa prices up 19.8%.
- Long-term visa options: Dubai offers various long-term visa options for property investors, such as the 10-year Golden Visa, which grants residency to investors who buy a property worth at least AED 10 million, or the 5-year retirement visa, which allows retirees to stay in Dubai if they own a property worth at least AED 2 million.
- Tax-free income: Dubai does not impose any income tax or capital gains tax on property owners, which means you can enjoy the full returns on your investment.
How to Calculate the Minimum Salary to Buy a Property in Dubai?
The minimum salary to buy a property in Dubai depends on several factors, such as the property type, location, price, down payment, mortgage rate, and tenure. Here are the steps to calculate the minimum salary to buy a property in Dubai:
- Step 1: Determine the property price. You can use online tools such as DXB Interact to find the average property price per square foot in different areas of Dubai. For example, if you want to buy a 1,000 sqft apartment in Dubai Marina, the average price per square foot is AED 1,300, which means the property price is AED 1.3 million.
- Step 2: Determine the down payment. The down payment is the amount of money you need to pay upfront to buy a property. The minimum down payment required in Dubai is 25% of the property price for expats and 20% for UAE nationals. For example, if the property price is AED 1.3 million, the minimum down payment is AED 325,000 for expats and AED 260,000 for UAE nationals.
- Step 3: Determine the mortgage amount. The mortgage amount is the amount of money you need to borrow from a bank to buy a property. The maximum mortgage amount in Dubai is 80% of the property price for expats and 85% for UAE nationals. For example, if the property price is AED 1.3 million, the maximum mortgage amount is AED 975,000 for expats and AED 1.04 million for UAE nationals.
- Step 4: Determine the mortgage rate. The mortgage rate is the interest rate that the bank charges you for lending you money. The mortgage rate in Dubai varies depending on the lender, property, and your financial circumstances. The mortgage rates in Dubai is currently between 2.99% and 4.99%, depending on the lender.
- Step 5: Determine the mortgage tenure. The mortgage tenure is the period of time you have to repay the mortgage. The maximum mortgage tenure in Dubai is 25 years for expats and 30 years for UAE nationals. For example, if you choose a 25-year mortgage tenure, you will repay your mortgage over the span of 25 years.
- Step 6: Determine the monthly installment. The monthly installment is the amount of money you have to pay every month to repay the mortgage. You can use online tools such as HSBC Mortgage Calculator to calculate the monthly installment based on the mortgage amount, rate, and tenure. For example, if the mortgage amount is AED 975,000, the mortgage rate is 3.89%, and the mortgage tenure is 25 years, the monthly installment is AED 5,088.
- Step 7: Determine the minimum salary. The minimum salary is the amount of money you need to earn every month to afford the monthly installment. The general rule is that the monthly installment should not exceed 25% of your monthly income. Therefore, to calculate the minimum salary, you need to multiply the monthly installment by four. For example, if the monthly installment is AED 5,088, the minimum salary is AED 20,352.
What is the Minimum Salary to Get a Mortgage in Dubai?
The minimum salary to get a mortgage in Dubai is not fixed, as it depends on the bank’s criteria and your credit history. However, most banks prefer applicants with a monthly salary of at least AED 15,000, according to Edge Realty. Some banks may approve applicants with a lower salary, but they may charge a higher interest rate or require a higher down payment.
What is the Minimum Salary to Buy an Affordable Property in Dubai?
The minimum salary to buy an affordable property in Dubai depends on the definition of affordable. Some of the most affordable areas to buy a property in Dubai are International City, Jumeirah Village Circle, Dubai South, and Dubai Sports City. The average property price per square foot in these areas ranges from AED 500 to AED 800. Therefore, if you want to buy a 1,000 sqft property in one of these areas, the property price ranges from AED 500,000 to AED 800,000. Using the same steps as above, the minimum salary to buy an affordable property in Dubai ranges from AED 8,000 to AED 12,800.
What is the Minimum Salary to Buy a Luxury Property in Dubai?
The minimum salary to buy a luxury property in Dubai depends on the definition of luxury. According to Damac Properties, the most luxurious areas to buy a property in Dubai in 2022 are Palm Jumeirah, Downtown Dubai, Dubai Marina, and Jumeirah Beach Residence. The average property price per square foot in these areas ranges from AED 1,300 to AED 2,000. Therefore, if you want to buy a 1,000 sqft property in one of these areas, the property price ranges from AED 1.3 million to AED 2 million. Using the same steps as above, the minimum salary to buy a luxury property in Dubai ranges from AED 20,400 to AED 31,200.
Conclusion
Buying a property in Dubai is a smart investment decision, as the city offers high returns, capital appreciation, long-term visa options, and tax-free income. However, you need to have a minimum salary to buy a property in Dubai, which depends on the property type, location, price, down payment, mortgage rate, and tenure.
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