Real estate investment in Dubai is an interesting option to generate permanent income and build future wealth, and as with all types of investment, it involves various risks and there are several factors that must be carefully considered before entering the real estate market, whether in Dubai or elsewhere, with the aim of ensuring maximum financial returns.
Why invest in real estate in Dubai?
Dubai has the potential to achieve high rental returns compared to many mature real estate markets, where investors can achieve average rental returns of between 5-9%.
Dubai stands out for its low cost per square foot compared to other global cities, making it a preferred destination for investing in luxury real estate.
New legislation for residence visas related to real estate investment provides opportunities for investors in Dubai to obtain residence visas available under specific conditions. Investors who own properties worth more than AED 1 million receive a 2-year residence visa, while owners of properties worth more than AED 5 million have the opportunity to obtain a 5-year visa, as for those who own real estate worth more than 10 million dirhams, they can benefit from a residence visa extending for 10 years.
Favorable tax conditions, especially with no property taxes and stamp duty, make Dubai an attractive investment destination for real estate. This easy tax system makes it easier for investors to invest their money without the burden of additional taxes, which enhances the city's position as an attractive investment destination.
Factors for the success of real estate investment in Dubai
Availability of facilities and services available at the specified location, including transportation and proximity to educational institutions, child care centers, etc.
The available space of the property.
The quality level of the property and facilities provided.
The state of the real estate market and the appropriate timing for the purchase process.
Interest rates available for real estate financing.
Maintenance costs, including fees and costs associated with maintenance services and services provided by real estate regulatory authorities.
How to achieve a high return on investment in Dubai
Residential apartments typically have higher rental returns compared to townhouses and villas, because renters in Dubai often belong to visitors and middle-income citizens, allowing them to be able to rent smaller, less expensive housing and accordingly, investing in residential apartments is considered a more attractive option for real estate investment in Dubai.
We recommend choosing small-sized apartments (such as studios and one-bedroom apartments) in affordable complexes with excellent infrastructure, close to transportation and basic amenities such as schools and hospitals, as these apartments are an ideal choice for real estate investment that offers profitable returns.
Maintenance fees imposed by Dubai Land Department, based on RERA's Service and Maintenance Fees Index, may significantly impact overall investment returns and this indicator specifies a fee per square foot, and its value varies according to the residential complex, as it is recommended to check the latest updates regarding fees directly through the official website of the Dubai Land Department before making any investment decision.
Read also: Learn about the best areas for family residence in Dubai
Types of real estate investment in Dubai
Real estate investment in Dubai is divided into two main parts: investment in ready properties and properties under construction, each of which has its own advantages and disadvantages.
Real estate investment in Dubai in properties under construction
The most prominent features of this type of investment are:
Purchasing off-plan property offers more attractive options for investors in terms of cost, as their prices are usually much lower compared to ready properties and the value of the property is also expected to increase as construction work progresses and the delivery date approaches, which increases the capital value for investors and in addition, down payment terms when purchasing off-plan properties provide the opportunity for lower down payments, typically between 5 - 10% of the property value, versus 25% when purchasing ready properties, making it an attractive option for investors, as for payment plans, developers offer very flexible and attractive payment plans, as in some cases payment plans may range between 2-5 years after delivery, which allows investors to put the property up for rent before starting to pay.
While the disadvantages of this type of investment are:
Changes and fluctuations in the real estate market may include a decline in prices, which may result in a property valuation being lower than the initial purchase price, as canceling the project or delaying the delivery date may also expose you to risks, especially when purchasing the property off-plan, as you must conduct independent research on the developer company to ensure its record and reputation.
Real estate investment in Dubai in ready properties
The most prominent features of this type of investment are:
Depending on the state of the market at the time of purchase, investors can benefit from a price advantage, as they can purchase ready properties at significant discounts as a result of new offers and bargains that may occur at these times and in addition, ready properties are usually located in prime locations with complete infrastructure, ensuring easy and convenient access to basic amenities, as once the property is rented, investors with ready properties can benefit from immediate returns and in addition, investing in ready properties provides stable and proven rental returns, ensuring financial stability for the investor.
The most prominent disadvantages of this type of investment are:
The amount required as a down payment varies according to nationality, with expatriates in Dubai required to pay 25% of the purchase price value as a down payment, while the minimum for UAE nationals is 20% for properties worth less than AED 5 million, as directed by the UAE Central Bank, as for upfront costs, they are generally estimated to be around 7-8% of the purchase price, and an accurate estimate of upfront costs can be obtained by using the comparison calculator available via the attached link and in addition, if you intend to take out a mortgage loan, the time required by the bank to grant the loan must be taken into account.
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