Buying And Earning: How to Achieve a High ROI in Dubai Real Estate


How to Achieve a High ROI in Dubai Real Estate

Dubai is known not only for its iconic skyscrapers, luxurious amenities and scenic beaches, it has earned a reputation as the world’s premier investment destination. Buying property in Business Bay and other up-and-coming communities in the emirate is one of the most common ways to increase wealth. Thanks to the government, which put forward a successful post-pandemic strategy, as well as a number of social and economic reforms, the local market has strengthened its position and attracted 73.7% more investment than in 2020.

Reasons to invest in Dubai property

Among the many reasons why people from all over the world continue to invest in Dubai real estate, the following five factors should be highlighted:

Growing population

Dubai is a cosmopolitan city with people from over 200 different countries looking to advance their careers or build successful businesses. As its population is constantly growing, the demand for local real estate also continues to rise.

Currently, about 3.5 million people live here, and according to forecasts, this number will double over the next 20 years. Despite the impact of the COVID-19 pandemic, which resulted in an 8.4% reduction in population, the city still managed to bounce back quickly. Now there are 100,000 more people living here than in January 2020.

Developing economy

Dubai is a strategic hub between East and West. Because of this, it attracts international companies that want to expand in one or both directions. With its diversified and stable economy based on tourism and trade, the city is attracting foreign investors more than ever. With the help of new free economic zones and Expo 2020, the city has undoubtedly become the largest business center in the Middle East.

Why Should We Hire You? 5 Best Answ...
Why Should We Hire You? 5 Best Answers

Innovation

What is helping economy and population grow at a rapid pace is its state-of-the-art developments and innovations, from the tallest buildings to the largest airports. The city is an international center for technology and business development, as well as a recognized world leader in artificial intelligence, robotics and financial technology.

High quality of life

Dubai is recognized as one of the best cities to invest due to its high quality of life and world class infrastructure. Local residents have access to exceptional amenities including:

  • exquisite bars, cafes and restaurants;
  • comfortable beaches;
  • shops, supermarkets and shopping centers;
  • parks and public recreation areas;
  • water parks, cinemas and other entertainment facilities;
  • kindergartens and educational institutions offering programs in the UK, USA and other countries;
  • the best hospitals and medical clinics in the world.

Safety

Ensuring a high level of security is essential for a local government seeking to attract a large number of expats and investors. In addition to successfully fighting the global COVID-19 outbreak, the city is known as one of the safest cities to live in the world. It boasts a low crime rate and an efficient legal system.

When it comes to real estate investment, Dubai offers a strong regulatory framework designed to protect the interests of investors. The city is also the most transparent and regulated market for residential and commercial properties in the entire MENA region, further attracting buyers and end users.

In addition, the real estate sector represents the market with the lowest risk of a price bubble among other cities in the world.

Ways to make money on real estate in Dubai

Long term rental

Long-term rental property is a popular practice among investors in Dubai. There is a rule in the emirate according to which the owner does not need to cover the commission if he delegates the management of the property to the management company. Funds are charged from the tenant, and usually the amount of this commission does not exceed 5% of the rent. Arrangements with the tenant are written in the contract, which can be found on the official website of the government. This contract protects the interests of both parties.

To rent out housing for a long-term lease, the owner will need two documents: a passport and a certificate of ownership. Cash receipts can be managed remotely, because in this case it is not necessary to be physically present in the UAE. The contract, as a rule, is concluded for a year, during which the tenant cannot move out of the apartment. Otherwise, he will have to pay a fine. On the other hand, the owner has the right to evict the tenant, but then he will also have to face financial losses.

Short term rental

Short term rentals allow you to get the most out of your real estate investment. To start renting out housing, the owner needs to obtain a license for one year (the cost of a license is USD 600) and enlist the support of a reliable management company. The management company will be responsible for the safety of the property, as well as maintaining cleanliness and order in the premises. As a rule, the cost of its services is about 20% of the amount of all funds paid by tenants.

Resale

Another strategy by which investors make money on real estate is the purchase and resale of properties. Earnings in this case are based on capital gains, that is, the difference between the original cost of housing and the resale value. To achieve high capital gains, investors tend to resort to the following tricks:

1. Purchase of the off-plan real estate. The earlier the project is, the lower its price. Investors buy apartments and houses under construction and resell them by the time the buildings are put into operation. Quite often, the cost of housing grows twice. Therefore, this is a great option for increasing wealth in just 3-4 years.

2. Fix and flip. Fix and flip is a popular strategy in which an investor looks for a resale housing in poor condition, buys it at a low price, redecorates it and finds a buyer who is willing to pay a large sum.

The best areas to find property for sale in Dubai

The city is divided into many communities, each offering unique benefits. The best locations in the city for real estate investment include:

  1. Jumeirah. Here you can buy both apartments in a well-maintained residential complex and a luxurious villa. The cost per square meter starts from USD 3.500, but elite properties on the first line are much more expensive. ROI varies between 3.9-5.7%.
  2. Business Bay. Despite the fact that the area is dominated by commercial real estate, local residential units are in demand not only among businessmen. The developed infrastructure of the community is suitable for families with children. The cost per square meter starts from USD 5.000. ROI varies between 3.9-6%.
  3. Dubai Marina. The area is popular with tourists due to its wide range of amenities and landscaped waterfront. The prices of local real estate also directly depend on the proximity to the waters of the Persian Gulf. The cost per square meter can reach USD 20.000 or more. ROI varies between 4-6.4%.

Assistance with buying property in Dubai

A wide range of Dubai real estate in various configurations and price categories is presented in the AX Capital catalog. Contact the highly qualified specialists of the agency to get help with the selection of the optimal residential property, support at all stages of the transaction and high-quality after-sales service.

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