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Imagine you have found a great 2 bedroom apartment for sale in Dubai. What should you do next? A large number of investors accumulate their capital through the scheme “buy for the lower price – sell for the higher price over time.” However, this is not the only way to make money in the housing market, especially when it comes to Dubai. What other options are there, besides the resale, we will consider them in the article.
Real Estate Investment in Dubai: features
- If you are a foreigner who decides to invest in the emirate, almost all types of real estate are available, from small studios to luxury villas.
- Typical residential properties (apartments and villas) can be divided into three price segments: economy, comfort, and premium. Experts call the emirate one of the most affordable premium real estate markets in the world.
- The cost of real estate in the city primarily depends on the location. According to local laws, foreigners are only allowed to take freehold ownership in certain areas. The final cost of a dwelling is affected by the footage, the view from the window, the decoration, and other details.
Investment in Property in Dubai
Another fairly popular way to make money on housing in the UAE, in particular in Dubai, is to buy an apartment under construction or a finished house and rent the property for the short or long term.
The demand for rental housing in Dubai is constantly growing. Every year, the emirate is visited by a huge number of tourists. The city ranks 3rd in the ranking of the ratio between the number of tourists and locals after Paris and Kuala Lumpur. In 2022, the popular emirate was visited by about 15 million tourists, while the local population is 2.7 million people.
The UAE is not only a tourist-attractive country, but it is also the state with the largest number of immigrants. Immigrants make up about 90% of the total population. The number of those who decide to move to the UAE is constantly growing. 140,000 people immigrate to the country every year.
The need for housing is rising as a result of both the ongoing population expansion and the tourism industry, which is expanding annually. Both short-term and long-term home rentals are sought. Due to this, investors purchase off-plan homes or flats in the secondary market not only for resale but also for additional short- or long-term leasing.
A Short-Term Lease
To rent out housing to tenants for a short period, the owner needs to obtain the appropriate license which will last 12 months. Its cost is USD 600. It is also important to sign an agreement with the management company. By the way, a broker can not only help you choose an investment-attractive apartment or villa and arrange its purchase but can also take over the management of the property. The specialist prepares the premises for delivery and finds tenants. As a result, the owner does not spend time on this but only counts the profit.
The most popular among tourists are studios and one-bedroom apartments. According to the experts, the areas located near the beaches and embankments are of particular interest. Profitable properties can be found in Dubai Marina, Palm Jumeirah, Downtown, JBR, and City Walk.
If we are talking about the short-term lease, the yield can be up to 12% per annum.
A Long-Term Lease
With this form of lease, the contract is signed for several years. It is also very convenient to use the services of a management company. The investor receives a stable income, and all the responsibilities associated with renting a villa or apartment – finding clients, checking in and out, checking and maintaining housing, are taken over by employees of the management company. The commission may be included in the rental rate.
To rent out housing for a long period, the landlord must have a passport and a document of ownership of the property, as in the situation with a short-term lease.
In the case of a long-term lease, the yield can be 8-10% per annum, depending on the chosen property, location, and other parameters.
Commercial Property For Sale in Dubai
Investors that want to purchase housing in the emirate are interested in various properties, not only residential ones. Brokers assert that a sizable portion of their clients choose to invest in commercial real estate. And this is not surprising.
Offices and commercial premises are most often bought to rent it out afterward. The payback of such real estate is from 5 to 7 years. Profitability is about 15-20%. The main thing is to choose liquid housing, which can be helped by an experienced realtor who knows the Dubai market.
How to Choose An Apartment
It all depends on the purpose of the purchase. You should try to find housing in coastal areas, e.g., Dubai Marina, Palm Jumeirah. At the same time, you are more likely to rent out housing at a profit and receive 7% per annum if it has a view and has no more than two rooms.
You should try to find resale apartments in undervalued areas such as Business Bay, Al Jaddaf, and Nad Al Sheba First. They occupy advantageous locations in terms of proximity to water and major tourist attractions.
However, they are not fully developed in terms of infrastructure. Therefore, housing here is cheaper than in the hottest locations in Dubai, e.g., Downtown. But as new residential complexes, schools, and transport hubs appear, housing prices here will grow up to 25% per year in the next three years.
The average cost of housing in Business Bay is AED 1.5 million, and in the adjacent Downtown, according to our map – AED 3,099,999.
How not to run into scammers
It is easy for a newcomer to the market to stumble upon scammers and unscrupulous realtors, e.g., in Dubai, brokers often artificially inflate prices or publish fake ads on the Internet.
You can avoid bad deals by following simple rules:
- collect reviews about brokers and developers, or rather communicate with their clients directly;
- study the procedures for buying and selling, transferring money, and opening accounts in official sources;
- compare data about housing from different sources;
- seek advice from several experts;
- ask experienced expats for advice;
- always sign contracts;
- check documents with the help of a trusted lawyer.
Real estate in Dubai
https://dubai-properties.sale/ website allows you to browse property from any part of the world. Go to the website, start your search today and tomorrow you will be a proud property owner in the emirate.