Investing in property is a great way to create wealth and generate income. However, all investments carry risks and there are many factors to consider before investing in Dubai’s real estate market so that you can get the highest possible return.
Why Invest in Dubai?
The city allows higher rental yields than many other developed real estate markets. On average, investors can achieve a gross rental yield of between 5-9%.
Property prices per square foot are globally lower than many other cities, making Dubai a major real estate owner.
New visa laws related to property investment enable investors to obtain residence visas under certain conditions. For assets of more than AED 1 million, you may be entitled to a 2-year residency visa.
For assets of more than AED 5 million, you may be entitled to a 5-year residency visa. While for assets of more than AED 10 million, you may be entitled to a 10-year residency visa.
Highly favorable tax conditions, in particular, the absence of property taxes and stamp duties, as applied in other global real estate markets, also portray the city as a highly attractive investment environment.
Buying property in Dubai
In Dubai, international ownership is permitted in areas assigned as a freehold. Foreigners and expatriate residents can hold property, rights of use, or lease up to 99 years.
Plots of land are specified as freehold properties in Article 3 of Regulation 2006 to determine areas for non-national ownership of the real estate in the Emirate of Dubai.
The title has been issued by the Department of Lands in the Emirates. There is no age limit for holding property in Dubai.
Off-plan assets vs ready assets
Everyone who invests in an off-plan property or readymade property in the secondary market has its pros and cons. Each person’s financial situation and risk appetite are unique, and as such, it is important to adequately assess the risks associated with both.
Right to buy off-plan
- Price: Buyers typically receive a price advantage with properties under construction, which are significantly lower than finished properties.
- Appreciation of capital: There is a high probability of assets increasing in value near completion and handing over.
- Short down-payment: An initial deposit of 5–10%, as opposed to 25% with ready assets, can get more of the purchase.
- Payment plans: Developers offer highly attractive, flexible payment plans in some cases 2–5 years after the payment plan, which means that you can rent the property before you start repayment.
Opposition to buy off-plan
- Changes in market conditions: The price of an asset may be lower than the initial purchase price due to the fall in prices.
- Delay or cancellation: There is a risk of projects being canceled, or completed after their due date. To mitigate this, it is important to conduct independent research on the developer to verify your track record and reputation.
Right to purchase ready property
- Price: Price gains may be relevant to market conditions over time. In a buyer’s market, it may be possible to buy a property at a significant discount. At this time, as markets continue to correct themselves and new supply enters the market, causing prices to fall, buyers can bargain.
- Location: Finished properties often occur in key locations in which the location is completed.
- Immediate Returns: You can start earning rental income from the time a tenant is found.
- Stable rental yield: Investing in finished property often provides the added benefit of proven rental yields.
Opposition to buy ready property
- Down-payment: According to UAE Central Bank regulations, the minimum deposit required for ex-pat is 25% of the purchase price for properties below AED 5 million and 20% for citizens.
- Timing: If obtaining a mortgage to finance your purchase, it is important to keep in mind the timing of your chosen bank change.
- Consistent: new supplies provide buyers with more choice options and drive prices to a more affordable level. If you want to invest in affordable prime real estate and get strong rental yields, then look no further.
Offer to get a good investment in DUBAI?
When it comes to real estate, there is no city like Dubai. It is home to important structures such as the Burj Khalifa and the forthcoming Dubai Creek Tower as well as thrilling attractions that will surprise you.
Is buying a property in Dubai a great investment?
Of course! The future is a haven for property investors due to the presence of metropolitan projects and the abundance of uniquely designed residential communities. With market-friendly buyers in the last few months, the time is right for those looking for property investment in Dubai.
However, Dubai has a long list of freehold areas that investors can choose from and it is important to choose the right location. Preferring the right area for Dubai real estate investment is required, as it can influence the ROI you can assume from it in a few years.
Buying a property in Dubai offers a high rental yield
Now to place the last spike in the coffin, let us estimate the average rental yield that a person can assume in our selected real estate capitals. The first thing we need to know is the average ROI% in these cities.
Hong Kong, which is not expensive to buy real estate and property taxes for all cities, only provides a 2.82% return on your investment of USD 500,000. The average rental yield in Singapore is 2.83%, London comes in third place with a rental yield of 3.21% and New York has reserved second place with an average rental yield of 3.91%. Dubai remains on top with a very conventional average rental yield of 5.82%.
There is no property tax in Dubai
No matter in which part of the world you buy real estate, you have to pay property tax. Dubai is popular worldwide with real estate investors because you do not have to pay any tax on your property. If buying a property in Dubai was the greatest benefit, there is no tax.
Consider an example to understand this situation better. Hope you had 500,000 USD to pay on real estate and you were worried about whether to buy property in New York, London, Hong Kong, Singapore, or Dubai?