As with any other market, the Dubai real estate market experienced a downturn when the COVID-19 pandemic hit. Even homeowners in elite communities like Palm Jumeirah, UAE suffered losses. Nevertheless, at present, the industry is back on track and continuing to recover at a blistering pace.
The return of foreign investors and Expo 2020 both contributed greatly to this recovery. A direct result of these factors is the growth in prices and demand for properties that have been noticed in the first half of this year.
However, this does not mean that every real estate investment in the Dubai sector guarantees a high level of returns. Buyers need to bear in mind a lot of details before making a final purchase decision. Below are six tips for those who aim for a high ROI (return on investment).
Table of Contents
Determine your budget
Setting a budget is an essential step that anyone aiming to achieve a high ROI should take. By doing so, investors are actually analyzing their purchasing capacity and identifying price ranges they can target. This requires a deep analysis of your own finances and thorough market research. After defining a budget, a buyer will understand what property type he should be looking for.
Home buyers have the opportunity to take out mortgage loans. Naturally, it opens up many advantages for them. However, if they don’t analyze their budget on their own and apply for a higher loan amount than they can afford and get approved, this can lead to a troublesome situation in the long run.
Set a goal
Some people acquire buy-to-invest real estate in order to resell it. Some prefer to own buy-to-let units to rent them out to earn a stable passive income. The criteria for selecting a housing facility are completely different in both cases. For example, if the buyer wants to resell the unit later, he should pay attention to the off-plan complexes. They are less expensive than ready-made estates. The main disadvantage of this type of investment is that there is a need to wait until the facility is commissioned.
Investors who purchase properties to generate rental income should consider many factors. First of all, they need to look for a unit in a convenient location for tenants. There should be a developed transport infrastructure and numerous amenities.
It is important that the investor defines the goal of his investments beforehand so that he can sort out matching offers accordingly.
Choose a district
In Dubai, housing prices tend to be quite high. However, the metropolis has several areas where relatively inexpensive residential properties can be found. Most frequently, these are areas situated far from the center. The acquisition of facilities in such areas is perfect for investors who are aiming to resell them for a higher value in the future.
This is why the process of selecting a location must be approached wisely. It is necessary to analyze all the pros and cons of each neighborhood of your choice and take into account market trends that may affect it later. As an example, places close to the Expo 2020 venue have shown significant development in terms of sales prices and rental value.
Do your own research
A potential homeowner will not be able to succeed in the real estate market, especially in a developed metropolis like Dubai, without thorough research. This is one of the key elements of successful and profitable investing.
The research required to choose a region has already received enough attention. However, there are many other factors that need to be explored before entering the market. For example, an investor needs to be aware of the property type that meets his goals. It needs thorough research as well as understanding in order to turn all probabilities in your favor. Similarly, it is better to deeply analyze market trends before making a purchase.
Get help from professionals
There are many pros to cooperating with a real estate agent. Nevertheless, buyers should only work with certified and licensed companies, such as Ax Capital. Clients can reach agency representatives at any time for services like:
- advice on any issues relating to the purchase, sale, or rental of real estate;
- support during all phases of the transaction;
- assistance with obtaining a mortgage loan;
- assistance with real estate insurance;
- assistance with financial affairs (opening a bank account, transferring funds, etc.);
- assistance with property management.
Choose the right rental rate
This advice applies to investors planning to receive a rental income. After acquiring a property, making a profit from investments will strongly depend on the selected rental rate. The rent set by the owner will ultimately determine the fate of his investments. Typically, rents charged by Dubai landlords range from 0.8% to 1.1% of the home value.
The major challenge for an investor expecting a high and steady income is learning how to set a balanced rate that reflects the highs and lows of the market. He must first study his competitors or landlords who rent out properties with similar configurations and in the same neighborhoods. If he follows all the correct steps, the property will quickly pay for itself.