Hidden Costs of Buying Property in Dubai and Abu Dhabi You Should Know

Hidden Costs of Buying Property in Dubai and Abu Dhabi You Should Know

Purchasing property in Dubai or Abu Dhabi involves more than the sticker price. Many buyers face unexpected expenses that can significantly impact budgets. Being aware of these hidden charges helps avoid financial surprises and ensures a smoother transaction.

Property Registration Fees

The biggest mandatory cost comes from official property registration:

• Dubai: 4% of property value + AED 580 administrative fee
• Abu Dhabi: 2% of property value + AED 500 registration fee

Agent Commission Costs

Buyer fees vary between emirates:

• Dubai: Commission capped at 2% of property price + VAT
• Abu Dhabi: Typically ranges from 1-2% + VAT

Mortgage-Related Fees

For financed purchases, expect additional costs:

• Loan Arrangement Fees: Up to 1% of loan amount
• Mortgage Registration: 0.25% of loan in Dubai, plus AED 290
• Valuation Charges: AED 2,500-3,500 per property

Ongoing Ownership Expenses

Post-purchase recurring costs include:

• Service Charges: Annual community maintenance fees
• Utilities Deposit: AED 2,000-4,000 (DEWA/ADDC)
• Property Insurance: 0.025%-0.05% property value/year
• Open Cheque Requirement: Blank security cheque maintained by management

Additional Transaction Expenses

Other frequently overlooked costs:

• No Objection Certificate Fees (AED 200-500)
• Transfer Disbursement Charge (AED 200-300)
• Trust Account Administration Fees (0.1%-0.2%)

VAT Considerations

5% VAT applies to:

• Agent commissions
• Legal services
• Property management services

(Note: Property purchase price itself is VAT-exempt)

Regional Variations: Dubai vs Abu Dhabi

• Dubai: Higher registration fees (4%) but transparent digital processes
• Abu Dhabi: Lower registration fees (2%) but higher agent commissions

Cost Mitigation Strategies

Protect your budget with these approaches:

• Factor minimum 5-7% extra beyond property price
• Request full fee breakdown before signing MoU
• Verify developer service charge history
• Review utility provider requirements
• Consider property insurance bundles

Financial Planning Essentials

Understanding these costs prevents budget shortfalls and enables smarter property investment. Always include 10% buffer above quoted fees as valuations and unexpected charges can arise during Dubai/Abu Dhabi transactions.