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HOW TO CHOOSE PROPERTY FOR INVESTMENT IN DUBAI

HOW TO CHOOSE PROPERTY FOR INVESTMENT IN DUBAI

HOW TO CHOOSE PROPERTY FOR INVESTMENT IN DUBAI

  • Punit Rana
  • (0)
  • (393)
  • December 22, 2023

Research, Investment in dubai,Property for investment,real estate investing

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HOW TO CHOOSE PROPERTY FOR INVESTMENT IN DUBAI? 

Real estate investments in a city as active as Dubai bring considerable profits. A foreign investor in Dubai can expect not only a payback period of 10 to 20 years, but also a residence permit. However, for the purchase to be successful, you need to know exactly how the emirate’s residential market works.

In this article, we talk about why it pays to invest in real estate in Dubai, how you can avoid risks and what factors you should consider when making your choice.

WHY DO FOREIGNERS CHOOSE TO INVEST IN DUBAI? 

  • In Dubai, real estate is considered the most profitable investment in dubai. There are several reasons for this: (P)
  • No income taxes.
  • High standard of living and safety in the city and the country as a whole compared to many other popular destinations.
  • A stable economy unaffected by the pandemic and political conflicts. According to analysts, growth will be 4.5% in 2023.
  • The cosmopolitan nature of the emirate: Only one of the 23 employees here is a UAE citizen, the rest are expats from other countries who successfully integrate into the environment.
  • Simple process to purchase and register a property.
  • Same conditions for all expats (in the case of buying housing in a property zone).
  • Real Estate in Dubai
  • A way to earn passive income and obtain a residency visa.
  • Flexibility in terms of ownership: Apartments can be bought and resold at any stage of completion.

According to a recent survey of more than 12,000 respondents, Dubai has become a popular destination for buying a second home thanks to its infrastructure, a successful strategy to combat the pandemic and the introduction of visa and labor reforms. The survey was conducted by the company InterNations, which deals with communication between immigrants around the world.

Many foreigners choose Dubai as an investment location because they are sure that their money is safe here – the exchange rate of the dirham against the dollar has not changed since 1997. But another argument in favor of this state is the opportunity not only to save, but also to increase investment in Dubai. For this it is important to choose the right property for Investment.

IS IT PROFITABLE TO INVEST IN REAL ESTATE IN DUBAI? 

There are several ways to invest in real estate. One of the most obvious options is to rent out your property and generate income. Potential investors should consider the following: 

  • To make a profit from renting, you do not have to be in the UAE all the time or look for tenants yourself – the management company will do this for you. How quickly you can amortise your purchase depends on a number of factors. For example, it depends on the location, the type of lease you choose, the characteristics of the project, the area, the layout, the condition of the apartments, etc. Thus, an investment in Dubai with high profitability is guaranteed if the apartment is located in a sought-after area (properties in tourist and coastal areas are always in demand, as well as developed communities near business centres). The most popular apartment options are studios and one-bedroom apartments. Renting an apartment is generally easier than renting a villa. 
  • There are options for short-term and long-term rentals. In the first case, you rent an apartment for a short period of time (as a rule, this format works successfully in places that are in demand among tourists, for example, in the city center or with access to the beach). In the second case, the contract is designed for a longer stay: In this case, the property may be located in an area less popular with travelers. A potential tenant might therefore choose your offer because they work in a nearby office or because your property is within easy reach of one of the emirate's main transportation hubs.
  • Each residential or commercial space that can be rented out has its own indicator – ROI (Return on Investment in Dubai ). This indicator shows how much profitability the property you are buying can have or already has. This ROI in Dubai is the final figure after deducting all mandatory expenses. The average yield in the emirate today is around 5-8%. However, depending on the type of property, the yield may vary. For example, a long-term lease can bring you 4‒7% per year, while a short-term lease can bring 11‒13%.

Another way to make money from an investment is to sell it again later. You can buy a property in an off-plan project. You then have the right to either transfer the property while it is being built and benefit from a small price difference, or wait until construction is complete and sell the finished apartment with a significant increase in value – up to 20%. In either case, the seller benefits because every property for Investment becomes more expensive the closer it gets to completion. The sooner you buy a property, the higher your dividend will be.

HOW TO CHOOSE AN APARTMENT FOR INVESTMENT? 

The most popular options for buy to let and buy to resell are apartments. However, before you invest in a property, you need to consider a few aspects. Investing in real estate Investing in Dubai today can be very profitable if you take a number of steps before the deal: 

  • Inquire about the developer and make sure of its reputability.
  • Check the projects that the developer has already completed to find out if they will fulfill their commitments on time.
  • Decide on the location you are interested in. For example, it may be a developed area with a complete infrastructure. If you are considering buying in a new development area whose potential is not yet fully clear, you should consult specialists. Estate agents will advise you on all matters and help you choose the option that is right for the price and profitability.
  • If we are talking about apartments under construction, you can find a similar property for Investment in the same area and find out what its yield is and whether it is in high demand. Buildings in the off-plan phase have an important advantage – they can often be purchased from the developer via an interest-free installment plan.
  • Calculate or determine the ROI of a residential unit that has already been rented out. This indicator is directly influenced by the location. The average profitability of apartments in popular areas today is as follows:
  • Decide what type of apartment you want to buy and how big it should be.
  • Decide whether you have enough of your own money or whether you need to take out a bank loan.
  • Decide whether you will qualify for a residence visa when buying a property. In Dubai, the minimum threshold for obtaining a residence permit for a period of three years is AED 750,000 ($204,000). The document can be issued to immediate family members and can be renewed an unlimited number of times as long as you are the owner of the residential property.
  • Be clear whether the purchase will be solely an investme or whether you plan to live in the UAE for a certain part of the year. This decision may affect details such as features, views, floor plan, number of rooms, etc.

What are the risks of buying a property in Dubai? 

The emirate's real estate in Dubai market is strictly controlled by the country's government, so both buyers and sellers feel protected in many ways. However, it is worth paying attention to a few details to minimize the risks for investors. For example, problems may arise when buying properties off plan.

One of the biggest fears of potential homebuyers during the construction phase is the question: what happens to the investment if the developer stops construction or delays delivery? Although the situation with delayed completion of the building is very rare, it does exist and this problem may affect the buyer of the property for Investment.

To ensure the security of your real estate investment in Dubai, you should make sure that the purchase agreement clearly states the date of completion of the construction as well as the actions the developer will take in case he fails to meet the agreed deadlines. Cases where the project ceases to exist before completion are extremely rare, but no one is immune. In order not to get into an unpleasant situation and not to lose the money invested, you can either study the activities of the developer in advance on your own and make sure of the reliability of his reputation or trust the professionals. Real estate agents strive to reduce the financial burden on the investor, and thanks to their experience they can minimize possible risks.

To protect property buyers who are not in the planning stage, the Real Estate Regulatory Agency (RERA) has introduced some requirements. According to the regulations, developers are required to collect all payments they receive into an escrow account, which they can only access once a certain stage of construction has been completed. In other words, the developers are also interested in handing over the property on time and on the terms specified in the contract – otherwise they will not be paid for their work.

Another important aspect to consider and check is the registration of the construction company, the ongoing project and its escrow account in the systems of RERA and its parent organization: the Dubai Land Department (DLD). If there is no information about the company on the regulator’s website, you should probably not consider it.

If the reason for the construction freeze is financial problems or the bankruptcy of the developer, anti-crisis companies can help. They offer affected investors the opportunity to transfer ownership of already completed projects. Such companies work with properties that are ready for commissioning and offer them to buyers as alternatives that have similar characteristics to the housing that the previous developer failed to complete. Another way to solve the problem is to transfer the rights to complete the construction to another company.

The real estate Company in Dubai - Inch & Brick offers support at every stage of buying, selling and registering properties. The company's catalog includes all types of real estate in Dubai for foreign investors, and the experts' many years of experience and their detailed knowledge of the local market will enable you to make the right choice.

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