Whether it’s about designing a retirement plan or the wisdom of doubling up your wealth, investing in real estate property is either way, an exemplary life choice. From a multitude of locations to choose from, the UAE ranks at the top of the list. Let’s dive in behind the reasons for this ranking and take a look at the amount required if you invest in a property like a 4 BHK villa in the UAE.
Investing in the UAE real estate market
Before diving deeper into the intricacies of investment, let’s look at why investing in the real estate market of the UAE is an ideal choice for you. One of the significant reasons that make the UAE enviable by far is its geographical location. In the UAE, cities like Dubai are naturally gifted. Being the center of the universe, the city enjoys being the business hub of western Asia on the coast of the Persian Gulf.
To add icing to this cake of geographical dominance is the political stability that the country enjoys. The UAE is home to individuals from all walks of life. Despite having varied ethnicities, they live together in harmony, making the country safe and secure amongst all others in the world.
How much do you need to invest?
Now that you have the reasons for investment figured out, let’s look at the amount you need to invest in the UAE real estate market. The investment for real estate should be a minimum of AED 1,000,000 if you are an expat trying to achieve a Property Investor Residence visa. According to the UAE Central bank regulations, the minimum deposit required of expats is 25% of the purchase price for properties valued at less than AED 5 million.
On the contrary, if you are a national, you will need only 20% of that amount. Other costs that you need to keep in mind are the upfront costs. The upfront transaction costs can be estimated at approximately 7-8% of the property purchase price. Another cost that you need to focus on is the mortgage. Suppose you are looking forward to obtaining a mortgage to finance your purchase. In that case, it is also essential to consider your bank’s turnaround time.
Higher ROI for UAE real estate investment
The most crucial part of an investment is the return you get. According to statistics, the ROI in the first half of 2019 was the highest for Dubai Silicon Oasis (DSO). It offered a 9.5% return for apartments at the time. Others like Meydan and DAMAC Hills followed closely, offering gross rental yields of 9.3% and 8.9%, respectively.
Interestingly, these two also provided the highest gross returns for apartments. As for villa and townhouse communities, the most substantial gross return was by Town Square, which yielded 7.8% of the return. This was followed by The Springs, which was 6.6%, and Reem-Mira, which turned out to be 6.4% as well. Mudon gave a return of 6.3%.
Tips for higher ROI
If you want to achieve a higher ROI, then there are some tips that you can follow. Due to cities like Dubai being predominantly transient, the low-to-mid income population with a budget often prefers apartments in contrast to townhouses and four-bedroom villas. These individuals often look for smaller, affordable homes rather than lavish lifestyles.
Another crucial factor to consider is the location of your real estate investment. An ideal choice for investors would be small-sized apartments like studios and 1-bedroom apartments in affordable communities. The established infrastructure of the neighborhood often adds zest to these properties. Moreover, the property you invest in should be near transport and essential amenities like education and healthcare.
How to choose a profitable property
Investing in a property is a crucial decision to make. In order to choose a property that is actually profitable to you in the long haul, you need to think it all through. Today, buyers and tenants in the UAE aspire to live a lavish lifestyle. According to experts, this change can be credited to the pandemic. You see, following the lockdown, the supply demands in the real estate market soared. As a result, a shift in priorities incurred. Due to this reason, it is unlikely that an investor can earn high on economical real estate.
Currently, the minimum pricing for investors is AED 360,000 ($100,000). A cheaper stance in properties is possible but gaining adequate income? Not much. On the flip side, cities like Dubai have a wide array of properties that can be purchased profitably as investments. However, there is a limitation to the areas in the city where you can buy a property with full ownership. Foreigners can purchase real estate in freehold zones within a few neighborhoods of Dubai. These include Dubai Marina, Emirates Living District, and other legal zones.
Leasing property for longer time periods
Some areas of Dubai offer you the choice of freehold and leasehold as a form of ownership with the right to buy and lease real estate in the UAE for 99 years.
A leasehold is a form of ownership in which the property is transferred to temporary owners with the right to dispose of it at their own discretion. This option may look like a long-term lease, but in contrast to a standard contract, housing ownership can last for 99 years. Areas like Burj Dubai and Jumeirah District allow you to have this luxury.
Investments can be a hassle if not managed properly. Before diving into the market, you must be sure that you have looked at all the available options. After all, an expert opinion on something you may not have in-depth knowledge about is always worth one’s while. Oftentimes, we tend to overlook crucial details while making an investment choice. So, brace yourself as you look deeper into the real estate market of the UAE and find investment properties that give higher returns. Safe Investing!
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