Investing Wisely: Your Ultimate Guide to Investing in Dubai Real Estate
The Dubai real estate market is an important part of the city’s economy. Investing in Dubai Real Estate is on the rise.
Many people invest in property in Dubai. Buying a home or apartment in Dubai can be a good investment. However, the market has ups and downs. Prices can change quickly. It’s important to research the market before investing. This will help you make a wise decision. The government also plays a role in the real estate market. They have rules and regulations. These help control the market.
Overall, the Dubai real estate market offers many opportunities for investors.
It is a key part of the economy. Many people want to buy property there.
✨ One key thing is the location. Dubai is a major city in the United Arab Emirates. It has modern buildings and a high-end lifestyle. The city attracts many investors and buyers from around the world.
✨ Another important factor is the prices. Property prices in Dubai can be high, especially in popular areas. With the 2040 Urban Master Plan, prices will rise in the next 10-15 years. The best time to invest was before COVID-19, and now. The more you wait, the more expensive it will be.
Buyers need to think about the type of property they want in Dubai. Dubai has many options, like apartments, villas, and commercial spaces. Each type has pros and cons.
It’s important for buyers to work with experienced professionals to make the best investment decisions.
There are two ways to invest in Dubai’s Real Estate Market.
1. Secondary Market
In the secondary market, people buy and sell existing properties. This lets you get a property that’s already built or almost ready. You can then rent it out or move in quickly. But you can’t choose the building or amenities. You have to take what’s available on the market.
2. Off-Plan
The off-plan market refers to properties sold before they are built. You can buy these properties at pre-construction prices. They offer a 0% interest payment plan. This lets you invest with a lower contribution or in multiple units instead of just one on the secondary market. This can be a good option for those looking to invest in real estate. They can see a return when the property is completed and ready to sell or rent.
👉 There’s no single solution that works for everyone. It depends on your goals and budget.
If you’re not a Dubai resident, you may not be able to get a loan there (or with sepcific companies). But if you are a resident, you can get up to 80% financing on the property value, as estimated by the bank. If you can buy without a loan, this is quicker and easier.
To summarize it:
If you invest in the secondary market, you’ll need a larger down payment.
Another option is to invest in 2 or 3 off-plan properties using the same down payment.
In the off-plan market, you only need to pay 10 to 20% of the total amount upfront. Then you have 30 days to 3 months to pay the remaining 10%.
🤔 What does that mean exactly?
I will give you an example with a studio.
You can find small studio apartments (about 40 square meters) on the market for around 600,000 AED (approximately 150,000€), at the time this was written.
To buy on the secondary market, you need 600,000 AED on the day of the sale. You must have this money ready in front of the trustee.
For the Off-Plan Market, you can book a unit today with just 20,000 AED (5,000€). Then, you pay the remaining 120,000 AED (30,000€) of the 20% down payment in the next 3 to 5 working days.
💸 Are there any extra costs?
When you buy a property, you have extra costs to pay. These include things like legal fees and taxes. Knowing all the costs can help you plan your budget better.
Let’s talk about the secondary market first.
– Trustee: On the day of the sale, you meet the trustee. You need to pay 4,250 AED (1,100€) by card or cash.
– DLD: You have to pay 4% of the selling price to the Dubai Land Department to change the ownership to the government. You can find more details about the DLD below.
– Agency Fees: The agency takes 2% (+ 5% VAT) of the selling price.
Now let’s talk about the off-plan market.
– Oqood Fees: Oqood fees are like admin/contract fees. It is set by the developper, and is usually between 2,000 AED (500€) to 5,000 AED (1,250€) maximum.
– DLD: You have to pay 4% of the selling price to the Dubai Land Department to change the property ownership to the government. You can find more details about the DLD below.
– Agency Fees: There are usually no real estate agent fees. The developer pays us once we sell the unit! The agency fees only apply to the secondary market. That’s when you don’t pay the developer directly, but the previous property owner.
❓❔ What is the DLD? Why do we pay 4%?
Dubai Land Department (DLD) handles real estate transactions in Dubai. It legalizes property sales and approves, organizes, and documents real estate deals.
Have you ever heard some stories, few years ago about some people who invested in Dubai never got their apartments because developers left with the money?
This is no longer possible thanks to the DLD. The DLD inspects all projects every 4-6 months and updates the status on their website. You can find detailed reports on your project’s construction on their website.
To protect investors’ money, the DLD charges a 4% fee. This ensures developers cannot leave the country without delivering the units.
✅ What return can I expect?
Of course, investing depends on many factors:
– The strategy: Are you buying to sell or rent out? Do you want to grow money in 1-3 years or secure it long-term?
– The location: Do you invest in Jebel Ali, where prices are cheapest but it will take 7-10 years to be profitable? Or in Business Bay, where studios start at 1.2 million dirhams but the area is already built and profitable now?
For example, in JVC, a popular area for investors in 2023, you can expect around 7-8% net ROI on long-term rental and 12-13% on short-term rental with current market prices.
– The investment date also matters. If you bought in Business Bay in 2020, your ROI is likely 13-14% net or even more, for short-term or around 10% for long-term, since you bought it cheaper. But someone investing now, with a higher price, would get around 12% short-term or 8-9% long-term ROI, in the same area.
– Your downpayment also impacts ROI. Did you invest 100% yourself or use a 0% interest payment plan to finance 60-80% post-handover? The ROI differs based on how much you put down initially.
🗣️ As a conclusion, no one can tell you which property, project, or area is better for you unless they have a proper conversation with you. A real professional needs to know more about your current situation, your investor background, your budget, and your goals.
As an investor and real estate consultant, Elodie is invested in your project like it’s her own. She is with you to help find the best option before, during, and after your investment. That means you have support on the market, renting out your property, selling it, and anything else you need. Elodie is there to help, working with a professional agency that can help you choose the right property or project, handle the furnishing and handover, rent it out, or sell it.
➡️ Do you have more questions about Dubai’s real estate market? Do you want to discuss your project?
You can reach out to us through the contact page. You can book a call or send us your message.
Reach out to Elodie here.
By Dubai Connect.
