How much should you earn to buy a Dubai property worth $1 million?

Buyers should have a monthly salary between Dh30,000 and Dh40,000 and no financial commitments, experts say

Higher salaries can result in more favourable financing options from banks, subject to credit score assessments. Chris Whiteoak / The National

Krzysztof Lewandowski, a Polish national, recently bought an apartment in the Emaar Beachfront project in Dubai for Dh4.2 million ($1.14 million).

The 37-year-old is an advocate of the Dubai property market having seen attractive returns and significant capital appreciation for other units in his real estate portfolio.

He purchased his first property in Dubai, also in Emaar Beachfront, seven years ago and also owns an apartment each in Dubai Creek Harbour and Jumeirah Lakes Towers. These units have been rented out.

He also purchased a Dh4.2 million off-plan villa in developer Arada’s Masaar community in Sharjah.

“For $1 million in Warsaw, I could buy a 20-year-old apartment in the city centre and would also have to renovate it. The price appreciation, after all costs and maintenance, would be about 3.3 per cent to 3.5 per cent. That's why I sold two apartments in Warsaw and invested in Dubai instead,” says Mr Lewandowski, who owns a food business in Poland.

“My kids love it in Dubai. It's very safe. The payment plans are also convenient and make the buying process easier. Europe is quite dangerous now especially because of Poland’s geopolitical situation.”

The UAE property market continues to record strong growth on the back of government projects, the expansion of its economy and higher oil prices.

Last year, Dubai registered a 17 per cent annual increase in real estate transactions to 1.6 million across market segments, according to data from the Dubai Land Department.

Last year, the value of real estate deals in the emirate reached Dh634 billion, an annual growth of 20 per cent.

Mr Lewandowski says properties of comparable specifications and quality are not available in Europe for $1 million.

“Similar units with private beach access in Spain or France aren’t readily available and would be worth between €5 million ($5.4 million) and €15 million,” he says.

“In Europe, a developer buys a plot, builds and forgets about it. Also, most apartment buildings in Europe do not have amenities like a pool and gym and the energy and water bills are very high. But here, the master communities are so well-planned.”

He purchased an apartment in Dubai a few years ago for Dh1.6 million, which is currently worth Dh4 million.

For units purchased now, buyers can receive returns above 7 per cent, while for older units, they can get a 15 per cent return on investment, Mr Lewandowski says.

“We always buy property in Dubai hoping to live in it. But when we see the price appreciation, we rent it out because you make such good money that you can live in hotels and pay for it,” he adds.

What different salary brackets can afford

An applicant with a monthly salary of Dh50,000 can consider buying property close to $1 million, which requires an upfront contribution of 20 per cent down payment and 80 per cent bank finance, according to Rajender Prasad, managing director of mortgage consultancy Money Maestro.

Loan eligibility is subject to various criteria such as profession, income, salaried or self-employed, residential status like UAE resident or non-resident, age and other existing financial obligations like a car loan, personal loan and limit of credit cards.

“For a UAE resident who puts a 20 per cent upfront down payment of $200,000 on a loan tenure of 25 years, your monthly loan instalment will be Dh15,333,” says Farooq Syed, chief executive of real estate advisory and brokerage firm Springfield Properties in Dubai.

“If you do a 25 per cent down payment, the monthly instalment is around Dh14,500 to Dh15,000 per month. Therefore, to buy a property worth $1 million, or Dh3.67 million, you need to have a minimum monthly salary between Dh30,000 and Dh40,000 and no financial commitments like credit cards, personal loans or car loans.”

However, couples can combine their salaries, along with the required down payment, to become eligible for property ownership within this price range, according to Suchiit Odhrranii, senior client manager at real estate agency Betterhomes.

Higher salaries can result in more favourable financing options from banks, subject to thorough assessments of credit scores, he says.

“For properties worth Dh2 million, the down payment would be Dh400,000 with monthly payments of Dh8,349. To comfortably afford this, a monthly salary between Dh25,000 to Dh30,000 would be ideal,” says Lewis Allsopp, chairman of real estate agency Allsopp & Allsopp.

“If a buyer is looking at a property worth Dh1 million, the minimum down payment would be Dh200,000 with monthly instalments of Dh4,175. A minimum salary of Dh15,000 to Dh20,000 would be needed.”

What’s the down payment to buy a property worth $1 million?

If the buyer is a UAE resident, they can typically make a down payment of 20 per cent to 25 per cent and acquire the property through a mortgage, provided that the property is completed and ready for occupancy, according to Mr Odhrranii.

“The down payment required to buy a property worth $1 million can vary, depending on the nature of your profession and the lending institution,” Mr Prasad says.

“Typically, a down payment of 20 per cent is common, which would amount to $200,000, or Dh734,500, for a $1 million property. Some lenders may help with associated cost finance, which can cover transfer duties and real estate brokerage to support the lower down payment.”

It’s important to keep in mind other fees outside of the down payment, such as the 4 per cent Dubai Land Department fee, 2 per cent broker fee, and other ancillary charges on mortgage registration fees, movers and so on, Mr Allsopp explains.

If you buy off-plan from a developer, most require either 10 per cent or 20 per cent down payment.

Developers offer payment plans that are spread across the development stages of the property until the customer receives the keys upon completion.

What properties can you buy in Dubai for $1 million?

With a budget of $1 million, buyers can acquire a range of properties in various communities in Dubai, according to real estate agents.

You can buy a three-bedroom apartment in Arjan, a four-bedroom town house in areas like Jumeirah Village Circle and Arabian Ranches, and a five-bedroom town house in Damac Hills for $1 million, Mr Syed says.

Or you can buy a four-bedroom semi-detached villa with more square footage in Emaar South for $1 million, he says.

If you want to buy apartments, you can get three-bedroom units in areas like Dubai Creek Harbour and Dubai Hills Estate in this price range, he adds.

“This budget allows for options like two-bedroom units in areas such as Dubai Marina, Downtown and Dubai Creek Harbour, or town houses in prestigious communities like Arabian Ranches 3, Mudon, California Village, The Valley, Emaar South, and more,” Betterhomes’ Mr Odhrranii says.

Buyers looking at properties in the city centre hotspots such as Downtown Dubai, Dubai Marina, Business Bay and Jumeirah Beach Residence can secure a studio, one-bed, or two-bed apartment for $1 million, according to Mr Allsopp.

For those looking for properties in suburban residential areas, buyers can look at purchasing apartments, town houses and villas in areas such as JVC, Damac Hills 1 and 2, Motor City and Sports City. These communities usually offer studios to four-bedroom apartments and three- to four-bedroom town houses within this price range.

“Where buyers can get the best value for money is in off-plan units with flexible payment plans. Off-plan units are usually more affordable than ready units with longer payment terms,” Mr Allsopp says.

What could you buy for $1 million before the property boom?

Before the market’s price activity in the past few years, $1 million could get buyers larger properties in different areas across Dubai.

As of April, property prices in Dubai reached a record high, surpassing the previous peak from September 2014, according to data from Allsopp & Allsopp.

The average square feet price now stands at Dh1,351, marking a trend of 38 consecutive months of price growth, the data shows.

Before the property boom, you could buy a stand-alone villa for $1 million, according to Mr Syed from Springfield Properties.

“Now, with the same budget, one might be able to own a town house with three or four bedrooms,” Mr Odhrranii says.

“Alternatively, there were opportunities back then to acquire a three-bedroom apartment in a desirable location within this budget, but today, it may only be feasible to purchase a two-bedroom apartment.”

Despite the significant increase in price per square foot, Dubai remains one of the most affordable cities in comparison to other cities such as London, New York and Paris.

Who is buying property worth $1 million in Dubai?

Customers in the UAE opting to buy properties worth $1 million are typically high-net-worth buyers, expatriates, business owners or foreign investors, according to Mr Prasad.

“They seek luxury amenities, proximity to key locations, high-quality finishes, security features and potential for rental income or appreciation,” he says.

Investors and nuclear families are the primary buyers in this price range, Mr Odhrranii explains.

“Investors seek properties for rental purposes, aiming for a high rental yield,” he says.

“Small or nuclear families prioritise a comfortable living space with sufficient room, which could include a backyard for town houses or apartments situated near their workplaces for convenience.”

The availability of mortgages makes the $1 million price point even more attractive to first-time buyers, according to Mr Allsopp.

The largest buyer pool in this price range is Indians, followed by the South Asian community, while a lot of buyers are also coming from the UK and Europe (Germans, French and Italians), Mr Syed says.

“Indian, Pakistani and South Asian buyers are looking for town houses and villas. If they're younger couples, they're going for areas closer to Downtown like Business Bay and Meydan,” he says.

“Rather than buying a town house, Europeans prefer to buy a one-bedroom apartment for $1 million closer to the beach in Marina or Palm Jumeirah.”

European buyers are less price-sensitive and prefer branded residences. They're a lot more expensive and you get less square footage for the price, Mr Syed says.

South Asian buyers will opt more for space because they have predominantly larger families, They care lesser about the view and more about the size, he says.

Russian buyers prefer to buy beachfront or lagoon-facing properties. You can get a two or three-bedroom lagoon-facing apartment for about $1 million, he says.