All You Need to Know About Investing in Dubai Real Estate

Dubai is the cultural melting pot of the world. Dubai’s world class infrastructure, urban planning, and connectivity make it a hub not only in the Middle East but all around the world. The dynamic and rapidly growing economy provides exciting investment opportunities year after year. Right now, those exciting opportunities are centered around the real estate sector.

In 2021, Dubai had the highest number of real estate transactions in 12 years and it continues to grow, with more attractions taking place in the luxury real estate market. The competitive property prices in Dubai can be compared to major international hubs like London, Singapore, Paris, Hong Kong and New York.

Currently, Dubai is one of the best cities to invest in property. Some of the reasons Dubai beats out every other city in the world is the lifestyle the residents lead, the year-round sunshine, the low crime rates, the connectivity to the rest of the world, and social diversity. Foreigners need not be intimidated by the prospect of moving to the city as all these factors make the city easy to acclimate and fall in love with.

With the amount of options available in the market, you may be spoiled for choice. It is important to know what you are looking for and things to avoid/mistakes you would make while choosing a property to invest in.

Deciding to invest in Dubai should depend on a comprehensive and detailed analysis and research; You should consider the risks, your capabilities, and the market status to have a well structured plan for such an important step. 

This is why Property Finder is always here to help you make an informed decision. You can check out this great advice from one of our leading experts on the matter— Mohamed Kaswani, Managing Director of Mortgage Finder, the leading mortgage advisory company in the UAE and part of the Property Finder group. 

Here is a list of factors to keep in mind when making a decision to invest in Dubai: 

• Location: Choosing the location of the property wisely can make or break your investment! The popularity of the location and how accessible it is to attractions and essential destinations are crucial factors. 

For example, Dubai is known as a shopping hub on a global scale. Residents enjoy living close to areas with popular malls like Dubai Mall and Mall of the Emirates. 

Downtown Dubai, Al Barsha, Dubai Marina, and Palm Jumeirah are all communities home to grand malls in Dubai. 

In addition, according to Google Trends, Nad Al Sheba, Oud Metha, Jumeirah Lake Towers, and Dubai Hills are among the highly searched communities; this makes them good options to consider. 

• Short-term vs long-term rentals: Some properties will perform better on a short-term lease such as apartments in Downtown Dubai, Palm Jumeirah, Dubai Marina, and JBR; alternatively, villas in Dubai Hills, Jumeirah Park, and JVT provide better yield on standard leases. 

• Cash vs finance: You should weigh cash on cash returns and use leverage when appropriate.

• Service charges and property management fees: They differ from one property to another and should be taken into consideration beforehand.  

Off-plan vs Ready-to-move

You have two choices when it comes to investing in a property in Dubai, either off-plan unit or a ready-to-move one. The off-plan units are properties that are still under construction and yet to be delivered. On the other hand, the ready-to-move units are already completed and you can use them immediately. 

We have summarised the pros and cons of both types of properties below:

Pros of Buying Off-plan Properties

• Prices of under-construction properties are usually less than those already available
• Reputable developers build communities that gain significant value as they mature
• Down payments are often more affordable 
• Attractive interest free payment plans are available which enable investors to build their portfolio according to their cash flow capacity

You can have a look at the various off-plan properties on Property Finder to choose the ideal one for you. 

Cons of Buying Off-plan Properties

• Any changes in the market can be expected and may affect the original value of the property 
• Off-plan projects have the potential risk of being cancelled or delayed; that’s why research on the developer is crucial

Pros of Ready-to-move Properties

• The price you’re offered is according to current market conditions 
• The availability of seeing it in reality to decide if it’s a suitable option or not is preferable to some buyers
• Ready properties will always have the advantage of generating rental yield immediately post purchase

Cons of Ready-to-move Properties

• Higher upfront investment; this includes the down payment
• Sometimes there isn’t flexibility in the payment plan 

What Is Freehold and Leasehold Ownership?

Don’t let the real estate jargon dismay you! These simply refer to the type of ownership you are offered; check the definitions below: 

Freehold: Full ownership and legal rights to use, lease, or sell the property are transferred to the buyer 

Leasehold: Buyer does not have full ownership of the property which means they own it for a limited time (usually 99 years and can be lessened or extended).

What to Look out for When Buying Property in Dubai?

Forgetting the Extra Costs 

Be mindful of closing costs, service charges, and other operating costs to calculate the net yield of the property you’re buying. You need to be aware of possible agent fees, Dubai Land Department fees, mortgage fees, building service charges, or property management fees. 

Letting Emotions Get the Best of You

Investment properties are about numbers and not emotions. You may not like the property or neighborhood you’re investing in, but if it delivers a better yield then that’s what you should be focused on.

What Are the Best Areas to Invest in Dubai?

There’s always the question of where to invest in Dubai real estate, an emirate that doesn’t stop growing; this means your investment benefit can differs between now and in the future with such constant changes in the market and demand. 

The following statement from the managing director of Mortgage Finder, Mr. Kaswani, may help you with the decision making process:

“Waterfront properties will always be more desirable,” he suggested. “There are pockets of neighbourhoods that are selling at good value. You should leverage Property Finder’s map feature and compare price per square foot against adjacent neighbourhoods.” 

“For example, I recently bought a villa in JVT which is a 2-minute drive from Jumeirah Park and a 5-minute drive from the Meadows at a price per sqft that’s nearly 25% below Jumeirah Park and nearly 60% below Meadows,” he continued.

Can Foreigners Invest in Dubai?

Yes, foreign nationals can invest in Dubai real estate in freehold areas and leasehold ones. With freehold properties, once they buy the property, they have the right to use, lease, or sell it as they wish. 

As for leasehold properties, buyers don’t have full ownership yet they can only benefit from it for a long period of time (usually 99 years). Foreigners include both expats already living in the UAE and non-residents. 

What Is an Investment Visa?

An investment visa is a type of visa provided by the government for non-residents looking to invest in Dubai real estate. There are certain conditions to be met if you wish to gain this visa by investing in a residential property in Dubai: 

• To enjoy a stay through this type of visa, you should buy a property of value of at least AED 1 Million
• If the cash option isn’t suitable for you, no worries as you can go for mortgage; however, the property should be maximum 50% under mortgage 
• Having a partner investor is a good idea but in such cases the minimum share for each of you must be AED 1 Million
• In order to get this type of visa, the property you will invest in shouldn’t be an off-plan or leasehold one. 

Here’s a full guide on how else you can gain an investment visa in Dubai from Property Finder.

Considerations After Investing in Dubai

Once you become an owner of a property in Dubai, you can consider the following tips to help you succeed: 

• Hire a capable and credible property management company
• Demand real time reporting 
• Treat your tenants well 
• Consider quarterly payments to attract more tenants.

How Can Property Finder Help You Invest in Dubai?

After considering all the facts, knowing how to invest in Dubai real estate is a step in the right direction. Mr. Kaswani has shared his advice on how readers can use Property Finder to turn your vision into a successful reality once you become a proud owner of a property in Dubai:

• Property Finder empowers consumers and real estate investors with data and insights to help you make a better informed decision. We provide information about sale transactions to help you choose popular destinations for investment. 

• Property Finder is the premier listing portal in the UAE ensuring your home gets more visibility from our wide audience. After buying your property, you can list it on our platform through a trusted agent. This way it gets recognized much easily and you can have a tenant in no time.  

• Avoid listing your property through multiple agents when trying to rent it out. This will devalue your listing. Instead, look at Property Finder for community experts and Super Agents who have a track record in your building or neighborhood.

A real estate investment is an important decision to take and we’ve got your back with this exclusive guide from Property Finder. A real estate investment can also serve as an investment to your future self as it can provide a stable source of income for you and your family and Property Finder is there to guide you every step of the way.

A special thank you goes to Mr. Mohammad Kaswani for his valuable advice and input.

Also you can check Mr.Mohamed Kaswani Episode in Property Finder Podcast to know more about Mortgage.

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