Dubai is the cultural melting pot of the world. Dubai’s world class infrastructure, urban planning, and connectivity make it a hub not only in the Middle East but all around the world. The dynamic and rapidly growing economy provides exciting investment opportunities year after year. Right now, those exciting opportunities are centered around the real estate sector.
In 2021, Dubai had the highest number of real estate transactions in 12 years and it continues to grow, with more attractions taking place in the luxury real estate market. The competitive property prices in Dubai can be compared to major international hubs like London, Singapore, Paris, Hong Kong and New York.
Currently, Dubai is one of the best cities to invest in property. Some of the reasons Dubai beats out every other city in the world is the lifestyle the residents lead, the year-round sunshine, the low crime rates, the connectivity to the rest of the world, and social diversity. Foreigners need not be intimidated by the prospect of moving to the city as all these factors make the city easy to acclimate and fall in love with.
With the amount of options available in the market, you may be spoiled for choice. It is important to know what you are looking for and things to avoid/mistakes you would make while choosing a property to invest in.
Deciding to invest in Dubai should depend on a comprehensive and detailed analysis and research; You should consider the risks, your capabilities, and the market status to have a well structured plan for such an important step.
Factors to Consider When Investing in Dubai
Here is a list of factors to keep in mind when making a decision to invest in Dubai:
- Location: Choosing the location of the property wisely can make or break your investment! The popularity of the location and how accessible it is to attractions and essential destinations are crucial factors.
- For example, Dubai is known as a shopping hub on a global scale. Residents enjoy living close to areas with popular malls like Dubai Mall and Mall of the Emirates.
- Downtown Dubai, Al Barsha, Dubai Marina, and Palm Jumeirah are all communities home to grand malls in Dubai.
- In addition, according to Google Trends, Nad Al Sheba, Oud Metha, Jumeirah Lake Towers, and Dubai Hills are among the highly searched communities; this makes them good options to consider.
- Short-term vs long-term rentals: Some properties will perform better on a short-term lease such as apartments in Downtown Dubai, Palm Jumeirah, Dubai Marina, and JBR; alternatively, villas in Dubai Hills, Jumeirah Park, and JVT provide better yield on standard leases.
- Cash vs finance: You should weigh cash on cash returns and use leverage when appropriate.
- Service charges and property management fees: They differ from one property to another and should be taken into consideration beforehand.
- Off-plan vs Ready-to-move: You have two choices when it comes to investing in a property in Dubai, either off-plan unit or a ready-to-move one. The off-plan units are properties that are still under construction and yet to be delivered. On the other hand, the ready-to-move units are already completed and you can use them immediately.
Pros and Cons of Off-plan vs Ready-to-move Properties
We have summarized the pros and cons of both types of properties below:
Pros of Buying Off-plan Properties
- Prices of under-construction properties are usually less than those already available.
- Reputable developers build communities that gain significant value as they mature.
- Down payments are often more affordable.
- Attractive interest-free payment plans are available which enable investors to build their portfolio according to their cash flow capacity.
Cons of Buying Off-plan Properties
- Any changes in the market can be expected and may affect the original value of the property.
- Off-plan projects have the potential risk of being cancelled or delayed; that’s why research on the developer is crucial.
Pros of Ready-to-move Properties
- The price you’re offered is according to current market conditions.
- The availability of seeing it in reality to decide if it’s a suitable option or not is preferable to some buyers.
- Ready properties will always have the advantage of generating rental yield immediately post-purchase.
Cons of Ready-to-move Properties
- Higher upfront investment; this includes the down payment.
- Sometimes there isn’t flexibility in the payment plan.
