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Among investors from different countries, Dubai is currently one of the most popular destinations in the real estate market. In the emirate you can find both a residence for tens of millions of dollars and a studio for a hundred thousand dollars. Residential developments in the city are put into operation very quickly, there are no long-term construction projects and frozen projects, the demand for housing is high. Despite the huge number of advantages of the local real estate market, it is important for investors to enter it correctly to avoid losses.
Content:
Profitability
Investors are attracted by the high yield of housing in Dubai: with an investment of 20% to 40% of the total property cost, most residences can be resold while still under construction. At the same time, you can save the instalment terms.
The average annual yield of rental apartments in the emirate is approximately 20% of the housing cost. When reselling at the construction stage, you can raise the price of a house or an apartment by 30% to 50%.
According to experts, the Dubai real estate market continues to grow. Most residential properties purchased in December 2022 cost 40% more in April 2023.
If there are no funds to repay the instalment plan
When choosing real estate, it is important to calculate your resources correctly. The city offers interest-free instalments with a small down payment. Many investors enter the market with a minimum threshold, paying only 10% of the housing cost, as well as a tax of 2% to 4%. Further, the buyer must make payments several times a year. Experts recommend increasing the down payment. In this case, the size of other payments will decrease, thus repaying the loan will be easier.
If the investor cannot pay according to the schedule, then the residence must be urgently resold, otherwise all the money deposited will be lost, the seller will not return your investment.
Strategies
Here are three profitable strategies used by experienced investors:
- The residential property you’re interested in should be purchased as soon as its sale is announced. Most apartments in the emirate start selling even before the excavation stage, at the design stage. Apartment prices are rising as construction progresses. A quick turnover and an increase in money will be provided by the resale of housing before the development is put into operation.
- Purchasing a finished apartment, improving the property, and reselling it later. In 2023, an apartment in Dubai bought for AED 1,900,000 ($517,000) after renovation, which took about AED 100,000 ($27,000), can be sold for AED 2,500,000 in 2-3 months ($681,000). The increase is 25% per quarter.
- The purchased apartment is transferred to the management company, the employees of which find tenants for short-term rent, prepare apartments for the arrival of residents, monitor the undamaged conditions of the property and the furniture in it, and clean the housing after the guests leave. Agencies charge a commission of 20% of the rental price for their services. The annual income of the owner starts at 12% of the housing cost.
