3 Property Investment Strategies in Dubai

Investing in real estate in Dubai is becoming more and more popular with foreign investors every year. This is an opportunity to save and increase capital with a minimum of risks. There are several options for investing in real estate in Dubai with different returns. In this article, we will look at the 3 most popular investment strategies and explore their pros and cons.

Strategy #1. Resale property in Dubai.

This is the most profitable real estate investment option in Dubai, but it comes with certain risks. This strategy allows you to quickly return the funds spent and make a profit of up to 50% percent.

The best option in this strategy is to buy real estate at the construction stage (off-plan). The lowest price for an object is at the start of sales. By the time of delivery, it increases by an average of 20-30%.

You can resell the finished object or real estate at the construction stage. But it is important to consider that it is allowed to sell real estate that has not yet been handed over only after paying a certain part of the total cost of the object. Most major developers include this clause in the contract to avoid speculation in the market. Usually the amount is 30-50% of the total value of the object.

Developers in Dubai offer advantageous interest-free installment plans for several years. There are installment options for 1 or 2 years after the delivery of the object. The initial booking fee is usually only 5-10%. The investor at the initial stage makes a minimum amount, and the rest of the funds can be temporarily invested in other investment instruments or placed on a bank deposit at interest.

Pros:

• Highest profitability of all options
• Fast return on investment
• Opportunity to earn up to 50% from one object
• Interest-free installment plan from the developer during the construction phase and a minimum down payment.

Minuses:

• It is impossible to predict the situation in the real estate market at the time when the object will be built and commissioned. In 2023, the real estate market in Dubai is in a favorable situation. He's not overheated the risk of a bubble is almost zero. 2022 was a record year for the volume of transactions in history. In 2023, experts predict price increase by 13.5%. This is the highest figure among megacities in the world.
• Restrictions on sale during the construction phase. For resale, you must pay off a certain part of the value of the object (30-50%).

Strategy #2. Renting property in Dubai.

This property investment option in Dubai offers an annual return of up to 15%. This strategy has the lowest risks and long-term guaranteed income.

For renting, it is best to buy ready-made or completed objects at the stage of delivery. Then real estate in Dubai will start to make a profit immediately after the investment.

Profit from renting property in Dubai depends on:

• from the location of the object (area, transport accessibility, proximity to the beach, business center, etc.).
• on the type of property. Villas are more popular with tourists for short or medium-term rentals (daily or monthly). Studios and apartments are more often rented by expats for a longer period (the standard contract is usually for 1 year).
• from the duration of the lease. Short-term rentals in tourist areas bring up to 15% annual income, but depends on seasonality. Long-term rentals on average guarantee 5-8% of annual income.

Qualified specialists of real estate agencies are able to select the best object for subsequent leasing. The experts of the OWRealty agency have lived in Dubai for many years and are well acquainted with the local real estate market. They will help you choose the best option in terms of location, profitability, depending on the goals and budget of the client.

Pros:

• Minimum risk when investing
• Possibility to earn passive income for many years

Minuses:

• If a ready-made object is bought for rent, it has a higher cost than a similar off-plan property

Strategy number 3. Leasing with subsequent sale.

This is a combined option, which involves renting out housing before selling it. Thanks to this, it is possible to partially compensate for the costs of buying real estate immediately after the commissioning of the object.

This model has moderate risks with relatively high returns (up to 10% and above). The option is suitable for those who have not yet fully decided on the plans for the purchased property.

In this case, it is most profitable to buy real estate at the construction stage. The same advantages apply here as in strategy No. 1: minimal investment at the initial stage, interest-free installments, convenient payment schedule.

After the commissioning of the object, while the search for a buyer is ongoing, the property is rented out in order to partially compensate for the investments made.

Pros:

• Favorable installment terms from the developer at the construction stage
• Minimum cost at the start of sales
• Possibility to partially return the investment immediately after the commissioning of the object at the expense of rent
• Higher profitability on resale

Minuses:

• When investing at the start of sales, the delivery of the object will have to wait an average of about 3 years

To choose the most convenient option for investing in real estate in Dubai, it is best to contact the relevant specialists. There are more than 500 objects in the database of the OWRealty real estate agency. After talking with the client, the manager will help you choose the appropriate option based on the investment goals. The consultation is carried out by phone or video call.

After selecting an object, a personal manager accompanies the client at all stages of the transaction. The laws of the UAE allow you to draw up a contract for the purchase of real estate online from anywhere in the world.