How to make money investing in real estate in the UAE?

How to make money investing in real estate in the UAE?

01.10.2022 (updated 01.20.2023)

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  • How to make money investing in real estate in the UAE?

Why should you purchase housing in the United Arab Emirates? Most investors have valid reasons to do so. For example, there are no taxes on ownership, sale, or rent in this country. Moreover, income from resale and rental of real estate is higher than in many of the world’s key property markets.

UAE authorities are doing everything they can to attract foreign capital. Any investor who purchased real estate in Dubai worth a total of AED 750,000 (USD 204,000) or more can apply for a three-year residence visa renewable for an unlimited number of times while the applicant still owns the property. Let us take Dubai as an example of the UAE real estate investment market for a more detailed look.

Content:

Dubai’s investment prospects

There are 7 emirates in the country, the largest being the capital – Abu Dhabi. However, Dubai is more popular with not only travelers but also investors. In 2021, housing worth over AED 300 billion (USD 81.6 billion) was sold here. All other emirates combined didn’t sell real estate worth even a half of this amount.

Ian Goldin, Professor of Globalization and Development at the Oxford University, believes that the emirate’s market has already recovered to pre-pandemic levels. Therefore, an influx of foreigners to Dubai will only grow. This will increase the demand for real estate and the return on investment in rental housing.

Investment in residential properties for subsequent resale is equally promising, especially if you purchase off-plan apartments at the construction stage. They cost up to 20% cheaper than completed housing. In 2021, the price per square meter increased in Dubai. Experts believe it will continue growing throughout 2022. This means investors can see a quicker return in buy-to-rent properties. The growing prices also enable investors to make a profit by reselling residences purchased earlier in the year at a higher price months after the purchase. So if you are wondering if you can really make money on Arabic real estate, the answer is a resounding yes.

Dubai’s real estate market

Most investors in the UAE are now focused on Dubai. The local real estate market is developing much faster than all others in the Emirates. The Expo 2020 attracted many foreign investors to the city, and all event participants and guests needed accommodation, so landlords made a lot of money by leasing their housing.

Experts predict that the market rush will not decrease after the exhibition. One of the purposes of holding this event was attracting homebuyers. After the Expo 2020 is over, the emirate will be interesting for an even greater number of people. Experts think now is a good time to invest in Dubai real estate.

How to choose a promising property in Dubai

To choose a high-yield property in Dubai, you need to understand the demand drivers and the level of demand for various properties.

Nowadays, UAE buyers and tenants choose not merely comfortable but luxurious homes. This was one of the consequences of the pandemic that forced many people to reconsider their views on the living quarters. So you will not make a lot of money on the most affordable properties in the UAE. The lowest prices of real estate in Dubai for investors start at AED 360,000 (USD 98,000). You can find a cheaper property but it will be hard to lease and if you decide to resell, its liquidity will be lower.

If your budget is limited, a good investment option is purchasing off-plan housing in Dubai at a discount from the developer. The emirate currently offers a wide range of investment assets.

Dubai’s best districts for investment

The emirate’s best districts for investment include:

  1. Palm Jumeirah
  2. Dubai Marina
  3. Downtown Dubai
  4. Business Bay
  5. Dubai Hills Estate
  6. Jumeirah Village Circle
  7. Emaar Beachfront
  8. Arabian Ranches

These are popular communities with high-quality development and luxury amenities that consistently attract tenants and investors. Here, you can find various projects to suit any taste and budget, from snug studios to opulent villas. These districts are also freehold areas where foreigners can have full ownership of their purchased property. There is a total of 79 freehold areas in Dubai, as specifically stipulated in the law.

Long-term rental in Dubai

Long-term rent of real estate can yield a return of about 5 – 8% per year. This number is true for high-end communities, such as Palm Jumeirah, Dubai Marina, and Business Bay. Apartments in districts such as Discovery Gardens and International City can generate a return of up to 9%.

A lot depends on the type of residence. Studios and one-bedroom apartments generate the highest returns. Villas and mansions yield 4 – 6.5%.

You need to sign and officially register a rental contract to lease your property. The owner does not have to be personally present in the United Arab Emirates to do that.

Short-term rental in Dubai

Leasing out a home for a short period is more profitable, as it promises the highest yield of 11 – 13% per annum.

In Dubai, there are companies specializing in property management and maintenance, as well as finding tenants and dealing with them. These teams also check, accept, and clean the premises before tenants check in and after they leave. Management companies, however, prefer dealing with long-term rent.

As for the pricing policy, the rent on a one-bedroom apartment in Dubai Marina is around AED 110,000 (USD 30,000) per annum in case of long-term rental. If you lease apartments by the day or by the week, the rent is at least AED 367 (USD 100) per day. According to the statistics, the occupancy of such apartments in short-term lease is 75 – 78%.

We will help you to select investment property

AX CAPITAL is a real estate agency in Dubai ready to support investors in selecting and registering a property in the UAE Our team has worked in the emirate’s housing market for many years, so we can select the property that matches all your preferences and answer all your questions.

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