Dubai property buying cost negligible to Singapore, Hong Kong, London

Knight Frank, an international property consultancy, has already ranked Dubai amongst the “hottest” property markets in the world. But that’s not all.

The UK-based consultancy, which reviewed 15 global cities, in its new “Cost of Buying” report, said the purchase costs associated with buying a new-build residential property in the emirate is almost six times lower than Hong Kong and five times lower than Singapore.

The cost is lower in Dubai because legal fees apply only if the purchaser chooses to appoint a legal representative, while registration fees apply to mortgage at the rate of 0.25 per cent of the loan amount.

The Dubai Land Department said in March it has been recognised by the World Bank among the top 10 countries for providing swift and accurate property registration.  It takes mere 30 minutes after an investor submits all required documents to a complete transaction, which is made without the need of a transaction facilitator.

The UAE was placed fourth internationally in property registration in the “Doing Business 2011” report after being ranked 11th in the 2010 index.

Hong Kong remains the most expensive location to buy a home when all the associated costs are taken into account. Non-residents have to pay 25 per cent on top of the purchase price when buying a new-build $3 million home. The bulk of the cost consists of stamp duty and a property tax levied on foreign non-permanent residents.

Singapore comes in second with purchase cost at 19.3 per cent. Stamp duty in the island-state for non-residents is the highest of all in the world cities analysed in the report.

Knight Frank compared purchase costs for non-resident buyers purchasing a new-build property valued at $3 million, which includes stamp duty, legal costs, transfer fees and agency fees (where these apply for a purchaser).

London and Sydney take the third and fourth slot, respectively, with buying costs making 7.9 per cent and 7.2 per cent of the total purchase price in each city respectively.

In New York there is no stamp duty, but the purchase of a $3mn new-build condominium will incur a one per cent mansion tax with the total cost of purchase being five per cent.

Buying a house in Paris is relatively low-cost. Despite a registration and notary fee, it is cheaper to buy a luxury home in the city compared to other traditional locations. The cost of buying is just 1.8 per cent.

Moscow is the least expensive of the cities surveyed, but cost of purchasing a property in Monaco, one of the costliest property markets in the world, is only 2.5 per cent.

Cost of buying a new luxury home

      City                                      Purchase Cost
1. Hong Kong                                   25.0%
2. Singapore                                    19.3%
3. London                                        7.9%
4. Sydney                                        7.2%
5. Bahamas                                      6.5%
6. Cape Town                                    5.5%
6. Nairobi                                          5.5%
8. New York                                      5.0%
9. Geneva                                          4.5%
10. Dubai                                           4.0%

(Home page image courtesy Shutterstock)

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