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04.03.2024

REAL ESTATE IN DUBAI: what will bring income

The content of the article:

  • The rise in real estate prices in Dubai
  • Investment strategies: short-term and long-term
  • Mistakes that can be avoided 
  • How to make money on real estate
  • Popular areas for investment

 

The demand for real estate in the city, which once arose on the edge of the desert, is rapidly growing upwards. Many investors are eager to buy an apartment here. The city of Dubai is a destination where tourists from all over the world flock all year round. The warm climate, sandy beaches and azure sea are one of the factors of constant interest in the city. And another factor is the developed infrastructure: the world's tallest skyscrapers, luxury hotels, international schools, high—quality medicine, the best conditions for active sports — all this is a desirable place to invest. According to experts in this field, the growth in real estate prices in Dubai is growing by 8% every year, and according to their forecasts this will continue further. But the main thing that attracts investors is the absence of taxes on both property and income from its sale. Well, obtaining a residence permit for the purchase of housing undoubtedly pleases many. Can a dream apartment become a reality? And which option is more profitable for the investor, let's try to figure it out.

There are usually two ways to make money in the real estate market:

 

  • short-term, when they buy real estate and after a while resell it profitably and
  • long-term, which involves renting out the property for a long time.

Speaking of such methods, it should be noted that you need to make transactions competently and with a trusted agency. No matter what they tell you about the security of the Emirates, if there are a large number of realtors, you can burn out in this matter. Most often, realtors offer only new buildings or projects in the “completion” phase, promising “mountains of gold” after its sale. These promises are not always true, so be careful. Below we offer you options on how to avoid mistakes when buying an investment property:

  1. In our opinion, a more profitable investment is a long-term one that can bring you a stable annual income. And here you can find excellent options on the secondary market. Therefore, do not count on a quick profit from resale.
  2. Many people do not delve into interest-free installments or a mortgage from a bank, but there are pitfalls here. The developer has his own plan: the installment plan helps him sell more and faster, but you overpay in value for the period of using this installment plan. And buying a real estate object with a mortgage, you are already overpaying the bank. We always warn our customers about this.  
  3. Without installments, you can safely buy a secondary one, since there will no longer be any interest from the developer, and the price will be real at the time of sale.
  4. Before the time of purchase, you need to determine the location of your property, since the price of both the housing itself and the cost of renting in the future will depend on this. This way you can calculate your potential annual income.
  5. Professional investors invest little in the facilities under construction in prestigious areas of the city, since prices there are already quite high and it is quite difficult to get a large profit. Therefore, do not try to find such an object yourself, it is better to contact experts in this field. 

 

How to buy real estate “wisely”, what are the ways to make money on it?


We have already noted that the fastest and easiest way is to resell. The main advantage here will be the location of the object, access to the sea, view from the window, infrastructure. Apartments are also in demand as studios, they can be sold at a good profit. But this method can also be risky if you do not thoroughly study the market.
In second place is the rental of the facility. And there are two options here: you can rent daily (this can bring about 15% per annum), or you can rent for a long time (about 6-8% per annum). Both methods are popular with investors. But if you rent by the day, you will need to get a license from the Department of Tourism and Commercial Marketing. An annual license can be obtained online, and when renting for a long time, you do not need to issue a license at all, since the tenant pays about 5% of the management company.


Another type of income is commercial real estate. This group includes facilities that can bring an investor about 10% per annum. These can be offices located in a prestigious area of the city, a chain of shops popular with tourists, and warehouses that can be rented to large organizations. The advantage here is that the contract is concluded for a long time and you are not dependent on changes in the real estate market. And the minus is that you will need to pay VAT in the amount of 5%.

When buying an apartment, apartment or villa to get a stable income, be sure to pay attention (we already mentioned this earlier) to the area where your facility is located. We offer you the following locations:


Downtown — the area is located in the central part of Dubai, on the shore of the bay. Here you can choose a studio or an apartment with full furniture and immediately start renting. This area is the most popular, as there are famous sights of the city: Burj Khalifa, Dubai Mall and the world-famous fountain complex.
Business Bay — initially, this area was offered to investors for the purchase of commercial real estate. Indeed, large companies and offices are located in this part of the city. There are also luxury hotels with a high level of service and wonderful panoramic views of the city and the bay. Despite the fact that there is no private beach here, this option can also be considered for renting to married couples, as there are international schools and kindergartens with a high level of education.
Dubai Marina — this area has been chosen by many investors and not by chance. Here you can purchase real estate both for business and for a holiday resort, as there is access to the beach. Most of the apartments in this area have sea views, which undoubtedly affects their cost. In addition, the area is located near the city center and has good transport interchanges. Undoubtedly, this is a profitable area for investment, but at the same time it is also one of the most expensive areas. 

 

We also suggest at the purchase stage to look at the areas that are just beginning to be built up — MBR City, Dubiland — which in the coming years can bring significant profits. 


    
In conclusion, we note that the popularity of Dubai, which has grown in recent years, does not give up its position and will continue to grow along with the development of the city. Therefore, we offer you the opportunity to make money on real estate in this city, both on resale and on the rental business. Our experts will help you in choosing, they will select the options that are interesting for you. And our lawyers will advise you on all legislative issues. Do you want a consultation?

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