Dubai real estate: How much do you need to save to buy a $1m property

Financial experts in Dubai say buyers should prepare for costs beyond the initial down payment when purchasing a $1 million (AED3.67 million) property, with recommended savings of AED1.25-1.6 million ($340,000-$435,000 approximately) before making the purchase.

Buyers should have at least 30-35 per cent of the property price in liquid savings, according to Mike Coady, a Dubai-based financial expert with more than 20 years of experience told Arabian Business.

How much should a buyer save before purchasing a $1 million property in Dubai?

“Buying a $1 million property in somewhere like Dubai is an exciting milestone, but it’s far from a simple transaction,” Coady said, adding “The truth is, buying a home isn’t just about having the down payment; it requires a well-structured financial plan to avoid over-leveraging, unexpected costs, or future regrets.”

For expats, UAE mortgage laws require a minimum 20 per cent down payment for properties under AED5 million and 30 per cent for properties above that threshold.

Echoing the sentiment, Jo Phillips, Managing Director of Sales at Phillips & Walls Mortgage Brokers LLC explained that “the buyer would need to have a minimum down payment of 20 per cent to put down on the property.”

Some developers offer staggered payment plans with lower upfront costs for off-plan properties, but Coady warned these carry risks such as project delays or changes in market conditions.

Beyond the down payment, buyers must budget for closing costs, which typically range between 6-8 per cent of the property price.

For a $1 million home, this translates to AED220,000–AED290,000 ($59,900-$78,900 approximately) in additional expenses. These costs include:

• Dubai Land Department (DLD) Fee: 4 per cent of the property value
• Real Estate Agent Commission: 2 per cent of the sale price
• Mortgage Processing Fee: 0.25 per cent of the loan amount
• Property Valuation Fee: AED2,500-AED5,000 ($680-$1,300 approximately)

Buyers should set aside approximately 7 per cent for these fees, stating that buyers would need “approximately $270,000 total including the deposit and fees,” Phillips said.

Mortgage requirements, hidden costs for Dubai’s $1 million properties

Coady recommended an emergency buffer of 6-12 months of mortgage payments to protect against job loss or unexpected financial strain.

He also noted that furnishing and renovation costs for second-hand properties can range from AED50,000-AED500,000 ($13,600-$136,000).

“Many buyers focus solely on the down payment, but other costs quickly add up,” Coady explained.

According to Phillips, buyers cannot exceed more than 50 per cent of their monthly income for mortgage payments, including existing loans and credit cards.

Coady suggested a more conservative approach, recommending that monthly mortgage payments should not exceed 30-35 per cent of net income.

For a $1 million property with a mortgage of $800,000 (AED2.94 million), monthly payments would be approximately $4,700 (AED17,500), requiring a monthly income of at least AED50,000 (approximately $13,600) for comfortable affordability.

Current mortgage rates in Dubai range between 3.99-5.5 per cent, however, Phillips noted that fixed rates start from 3.99 per cent across many banks, while Coady mentioned that mortgage options include fixed-rate, variable-rate, and Islamic financing.

“Fixed rates provide stability, while variable rates can be beneficial in a falling-rate environment,” Coady advised.

Saving requirements for $1 million property investment

For expats planning to purchase a property, Coady recommended saving 20-30 per cent of income if buying within five years, setting up automatic transfers to a dedicated savings account, and keeping savings in low-risk, accessible accounts if buying soon.

Phillips advised that high-interest accounts with easy access are popular among buyers for growing their savings.

“Many expats delay home buying due to poor saving habits,” Coady said, adding that “the easiest way to reach your goal is automation, discipline, and a clear financial plan.”

Both experts confirmed that Dubai does not offer home-buying incentives for expats, with Phillips stating there are currently no programmes “due to the demand in the market.” Only Emiratis benefit from government housing programs.

Phillips further emphasised the importance of reviewing all clauses carefully before signing on a property, as buyers need to provide a 10 per cent security cheque when making an offer.

“Ensure that you can afford the monthly payment based on your current outgoings, i.e., school fees,” she advised. “Always check the service and maintenance fees with the developer as these can vary and have to be paid either on a monthly or quarterly basis, so budget for this.”

Coady’s top advice includes understanding the full cost picture, avoiding stretching finances too thin, planning for all outcomes such as job loss or relocation, and thinking beyond the purchase to factor in property maintenance and service charges.

“Buying a $1 million home in Dubai is a big decision that should be part of a broader financial plan,” Coady concluded, adding “Whether you’re purchasing as an investment or a residence, it’s essential to work with a financial adviser to ensure you have a structured approach.”

Unlike other global cities, Dubai has no capital gains tax or property tax, making it an attractive investment destination.

However, Coady cautioned that if buyers later move to a country that taxes worldwide assets, they may be subject to tax upon selling the property.