Acquisition of Housing in the UAE During Economic Instability

Acquisition of Housing in the UAE During Economic Instability

03.20.2022 (updated 01.20.2023)

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  • Acquisition of Housing in the UAE During Economic Instability

Today, when not only the future, but even the present situation seems very vague, many people consider large expenses inappropriate. Some, for example, would think about the feasibility of buying a home abroad. Experts of the real estate agency in Dubai, AX CAPITAL – senior consultant Aram Grigoryan and broker Ruslan Sharipov – shared their professional opinion on this issue. They explained how reasonable it is to buy housing in the UAE now (specifically in Dubai), which areas are the most interesting in terms of investment, and what profit can be obtained annually by renting out properties.


The Rationality of Buying a Home in the UAE Today

Experts were unanimous! Investing in property in Dubai and the UAE is a reasonable is a reasonable and far-sighted investment, even today. As Aram Grigoryan noted, the market is cyclical, and each following cycle will always be higher than the previous one. According to him, the United Arab Emirates proved that they are situated outside of the current political situation, so investments in the UAE, including real estate, are not in danger. When buying real estate now in a country that adheres to neutrality, the client buys security and stability.

According to Ruslan Sharipov, it makes sense to consider the many interesting offers on the Dubai market. Many of them are initially built with a new vision, in which buildings are being constructed not individually, but in a community format that is growing in demand. In addition, investing in real estate in Dubai is a guarantee of receiving passive income in a stable currency. As a result of the stimulating economic activity, the real estate market in the UAE is set to become a phenomenon as it experiences the influx of foreign capital in its free trade zones and as the presence of offices of large international companies grows.

What You Need to Consider When Buying Property in the UAE for Rental

When asked whether now is a good time to buy a home in the UAE, if its owner hopes to benefit in the short term, Aram Grigoryan answered in the affirmative. He explained this by the fact that nothing has changed in the country itself. The specialist emphasised that the annual rental income will not exceed 10-12% of the cost of housing, even if we are talking about daily rentals, but in rare cases, this percentage may increase slightly if the client invests in exclusive property. Long-term rentals in popular areas will bring from 5% to 8% profit. The only exception will be the situation in which the client purchases completed real estate on an installment plan directly from the developer, in which case, the income will be significantly higher.

Ruslan Sharipov, in turn, replied that now is a good time for investment, but not for every project. According to him, one should carefully approach the choice of real estate, as well as seek help from professionals who, in addition to the emotional component, could also provide a rational justification for the purchase in a particular location.

As Mr. Grigoryan stated, it is worth noting that there is no inflation in the UAE, the flow of people wishing to settle in the country is constantly growing, and not everyone can afford to buy real estate. Many ex-pats who came from the CIS countries, due to the current political situation, are transporting their relatives, friends and acquaintances to the United Arab Emirates. The number of tenants is increasing, as is the demand for housing and the cost of rentals too. The expert emphasized that the population of Dubai is also growing, and in connection with the Expo-2020 exhibition, this trend has only intensified over the past year.

Ruslan Sharipov claimed that when buying for a short-term lease, it is better to consider properties not only in expensive areas on the first line of the sea but also in the developed part of the city, for example, in Business Bay or Mohammed Bin Rashid City (MBR City). Prices there are significantly lower, and the prospects for growth in liquidity upon delivery are higher. The reason for this is the transport accessibility and the available infrastructure.

Expert Recommendations: the Best Place to Buy Housing for Rental, Living and Recreation

For the most popular areas among foreigners, Aram Grigoryan listed the following:

He recommended focusing on housing under construction either in central areas (e.g. Downtown, Business Bay, Dubai Marina and Palm Jumeirah) or trusted communities (e.g. Rukan, Damac Hills, Dubai Hills). In the city center, you can safely choose detached buildings, and in more remote areas, look for housing in closed communities. Thus, the investor will be able to comfortably live or relax there, as well as rent out the property.

For those for whom real estate in Dubai is exclusively an investment project to make a profit from rentals, Aram Grigoryan recommended exploring investments in the Business Bay area or considering early entry into projects in coastal areas such as Madinat Jumeirah Living (JML), Port De La Mer, Emaar Beachfront, Dubai Marina and Palm Jumeirah. However, these projects are good for investments only at the start of sales, and after that, due to rising prices, the investment will no longer be as successful. He named the Meydan area as another option of choice, where you can combine the goals of living and renting out a property.

Mr. Sharipov, for his part, noted that real estate will certainly be in demand in the following areas:

Also, according to him, family communities are popular, including Creek Harbor and Dubai Hills. Areas that fall into the city’s development plan, such as Dubailand, will also be in high demand.

The expert noted that in any real estate market, regardless of the city, there are properties that are objectively in demand, and there are those that, for one reason or another, have lost their liquidity after the initial hype. At the same time, in the case of locations that are situated in the city center, there is no reason for concern. Projects in developing areas, which will be fully completed in a few years, are likely to bring a higher income, but the risks, in this case, will also be higher.

Our real estate industry professionals are always ready to assist and support you. If you are interested in buying a home in the UAE, please contact the AX CAPITAL specialists. We will help you choose the best conditions for investment, as well as decide on a suitable property.

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