What you need to know before buying an investment property in Dubai

investors Guide

Lawrence Real Estate advisor: Braxton homes

Dubai real estate offers some of the most attractive rental yields in the world. If you’re considering an investment property read on for all you need to know about investing in Dubai.

BUY . BUY IN DUBAI . DUBAI PROPERTY FOR INVESTMENT

Investing in property is a great way to build wealth and generate income. However, all investments carry risk and there are many factors to consider before investing in Dubai’s real estate market to ensure you yield the highest possible returns.

Why invest in Dubai?

  • The city offers higher rental yields than many other mature real estate markets. On average, investors can achieve gross rental yields of between 5-9%.
  • Property prices per square foot are lower than many other cities globally, making Dubai an affordable location to own prime real estate. 
  • New visa laws linked to property investment enable investors to gain a residence visa subject to certain conditions. For properties valued above AED 1 million, you may be entitled to a 2-year residency visa. For properties valued above AED 5 million, you may be entitled to a 5-year residency visa. While for properties valued at above AED 10 million, you may be entitled to a 10-year residency visa.
  • Highly favourable tax conditions in particular, the absence of property taxes and stamp duties, that are applicable in other global real estate markets, also paints the city as a highly attractive investment environment.

What to consider when selecting an investment property select an investment property

Strong return on investment (ROI) is the ultimate goal when investing in property. Securing a property which delivers healthy rates of return requires proper due diligence from the outset. Here are some of the factors that can influence ROI:

  • Location
  • Facilities and amenities available in the community, including proximity to transport, education, childcare etc.
  • Size
  • Quality
  • Market conditions and timing of purchase
  • Interest rates
  • Maintenance costs (RERA Service Charge and Maintenance Index)

Where to invest for high ROI

In the first half of 2019, Dubai Silicon Oasis (DSO) offered the highest gross returns of 9.5% for apartments. New communities, Meydan and DAMAC Hills closely followed, offering gross rental yields of 9.3% and 8.9% respectfully, again for apartments.

For villa and townhouse communities, Town Square yielded the strongest gross returns at 7.8%, followed by The Springs (6.6%), Reem – Mira (6.4%) and Mudon (6.3%).

For more insights on Where to invest in Dubai right now click here

For a full list of rental yields for H1 2019 by community, download your copy of Trends here

Tips for achieving strong ROI

  • Apartments typically provide stronger rental yields than townhouses and villas due to Dubai’s largely transient, low to mid-income population with a budget geared toward smaller, affordable homes.
  • Opt for smaller sized apartments (studio and 1-bedroom) in affordable communities with established infrastructure, near to transport and essential amenities such as education and healthcare.
  • Resale of smaller units is faster and offers a better value compared to larger sized properties, mainly because a major segment of Dubai’s expat population can afford to purchase these when the investor wants to release equity.
  • Annual maintenance charges payable to the Dubai Land Department based on the RERA Service Charge and Maintenance Index can materially impact overall returns. This index determines a specific charge per square foot and varies by community. Up to date fees can be sourced directly from the DLD’s website. Research the applicable charges for your preferred community before investing

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