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  • Jan 06, 2022

What You Should Know Before Buying A Property In Dubai For Investment?

Buying a property for investment purposes is not the same as buying a home for yourself. As a result, the two approaches must be extremely distinct, and they must be evaluated using very different criteria. 

Purchasing a property in Dubai that will serve as your home is a very personal and emotional decision. It must be in a location that you prefer, have features and attributes that you desire, and be a space that you can imagine yourself living in on a daily basis. 

However, when you buy property in Dubai just for the sake of capital appreciation, yield, or both, it necessitates a whole different strategy. It is strictly a business choice in which you should consider elements such as rental return, capital growth potential, demand, e.t.c.

Checklist for an Investor Buying a Property in Dubai

Following are some of the points an investor should consider before buying a property in Dubai for investment purposes:

Define Your Purpose for Investing 

Return on investment, whether in the form of annual yield or long-term capital gain, is the most important factor for most investors. And if you’ve decided to invest in real estate in Dubai, you’re in for a treat. 

The real estate market in Dubai has plenty of capacity to accommodate both first-time buyers and those who have made this Emirate their luxury home. The first step in investing in Dubai property is to determine what you want and why you want to invest. 

This is important because you have to decide whether you want to relax and unwind, or you want to rent it out to travellers. After you’ve figured that out, you’ll know exactly where and how you should invest.

Importance of Location

The golden rule in real estate is to never underestimate the potential of a great location. It comes at a high cost and you’re just as concerned with the ROI as everyone else. Moreover, they both are directly proportional: the better the address, the larger the return on investment.

So, it’s a very crucial and big decision where you should invest. Some factors you should consider are:

  • Area demographics 
  • Population trends
  • Rental demands
  • Public transportation
  • Rental rates
  • Accessibility
  • Kinds of housing
  • Recent sales trends
  • Future planned developments 

Which Type of Property in Dubai Delivers Higher ROI?

The type of property you purchase will be primarily determined by your investment objectives as well as the area. It is commonly believed that apartments, on average, outperform villas and townhouses in terms of ROI. However, according to recent trends, the villa market in Dubai has grown substantially, and is producing high ROI for investors.

Moreover, you can buy off-plan which does not generate immediate profits but often can deliver a higher resale value.

Researching and Analysing the Market

It is tough to choose just one property in Dubai when there are so many to choose from! You should always research on your own to combat this and get the most out of your investment. 

Begin researching investing patterns, present trends, and forecasts. More importantly, as Dubai’s skyline continues to add to its gorgeous list of concrete creativity, do some study on the area where you want to buy a home. 

Newer projects frequently seek to gratify the hungry investor. The more you learn about real estate, the more insight you gain into this market.

Freehold Area

It’s also worth noting that certain houses are located in a ‘free hold’ area. When you buy a property in Dubai in such an area you receive full ownership and flexibility over the property, which means you get to decide how you want your home to look.

Difference between Investment vs Expenditure

After you’ve done a comparison of the number of properties and market research, you’ll need to look at your personal spending and saving habits and perform some math.

For individuals intending to invest and subsequently rent out their property in Dubai, your cash flow equals the rent you expect to get (minus costs such as upkeep, taxes, insurance, and repairs).

For people wishing to invest and use the property as a primary residence or a vacation home: your annual income (minus your monthly expenses) will then be equal to your cash flow.

It’s important to remember that all of the above is dependent on your investment goals in Dubai, as well as the real estate market at the time of calculation. International rising markets, such as Dubai’s, are likely to provide an 8% better ROI than others.

Exit Plan and Costs

You should always have an exit plan as eventually, you will want to sell your investment, just as you will with most other assets. So it’s necessary to know for how long you will keep your home investment and what your selling costs will be. 

This brings us to one of the things that makes Dubai so appealing as a place to invest. That is No TAX! 

As a result, any gains made on the new sales price go to the owner, and because the buyer usually pays the transfer fee and agency commission, the seller pays almost no expenses.

Consulting a Real Estate Agent

Now that you know so many points before buying a property in Dubai, you should also consider consulting an expert real estate agent. 

An agent in Dubai stands out from the crowd because of their experience with the sector, market trends, and changes. What you’re truly after is to get the most out of your investment, and the top real estate agents know their way around the market. There are many top property portals, such as Zoom Property, you can consult to find the best properties for sale in Dubai. 

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