Many property buyers in Dubai seem to be a city of contrasts. On the one hand, this is a megapolis, which literally walks ahead of the rest of the world, ambitious projects are being implemented here, investments from millionaires and billionaires flow here. Dubai really gives the impression of a “city of the future.”
On the other hand, many investors have so many prejudices about buying property here that Dubai as a whole seems to them to be as inaccessible as flying into space – it seems that tourists are already flying, but this is somehow very difficult.
In fact, most of the ideas about buying property in Dubai are myths that prevent businessmen from effectively saving and increasing their money, or simply providing comfort for themselves and their families. For example:
Myth 1: Property in Dubai is too expensive, it is a city of luxury and luxury apartments
The reality is that in Dubai there are apartments and houses of any class, from the cheapest, to the luxury style. Moreover, due to the growing number of migrant workers, developers today are focused primarily on affordable housing, as the most demanded. As a result, today there are even more cheap apartments in Dubai than in the middle and high price category.
In general, the market without any difficulty is home to almost any class, while a modest one-bedroom apartment on the periphery of the city is comparable in price to a similar one in a large Russian city.
Myth 2: Dubai is an Arab city where Muslims live, strict laws work. Living here is uncomfortable and you should not buy an apartment.
The most common myth. In fact, in Dubai, 90% of the population is not indigenous, but in areas with middle-priced apartments, the majority of residents are Europeans, Americans and Russians, businessmen and managers of large companies.
Dubai is the most international, the most “western” of all the Arab cities. The government simply cannot physically force half of the population to live under strict Muslim laws and does not try to do it. The various restrictions in Dubai are no stricter than, for example, in Berlin or Singapore, there is no orthodox religious fanaticism here. Children of city residents study in schools in English, women dress here as they see fit, and no one forces them to observe the fast of Ramadan, even at this time there are unwritten rules that should be observed simply out of courtesy.
Myth 3: Foreigners can not own property in Dubai
In fact, freehold zones were specially formed for the sale of real estate to foreign nationals in Dubai – in which housing is acquired in full ownership is completely legal and quite simple. Freehold real estate includes properties in the most attractive areas for investors and rich expatriates – Dubai Marina, Downtown Dubai, The Palm Jumeirah, Jumeirah Lakes Towers, Emirates Living. Buying a house here, you become its full owner.
The time has come to dispel the most common myths about Dubai, which prevent many businessmen and investors from seeing property in this city as a profitable and convenient investment, and moving here as an opportunity to significantly improve their living conditions.
Myth 4: Buying a property in Dubai is difficult, there are many nuances and pitfalls in the procedure
In fact, this is exactly the opposite. The government of Dubai is taking all possible measures to simplify the procedure for the conclusion of a real estate transaction both for the buyer and the seller. All a foreigner needs in order to buy property in Dubai is a passport and money. The main part of the transaction takes place in the Land Department, where the buyer receives a certificate of his full ownership of an object. All transactions are controlled by the agency for the regulation of the real estate market in Dubai, which does not allow the presence of unregistered developers, homeowners or agencies in the market, and whose task is to secure both sellers and buyers as much as possible. The procedure for processing real estate transactions in Dubai is such that it is almost impossible to become a victim of fraud.
Myth 5: It’s boring to live in Dubai – it’s a city for tourists and businessmen.
This statement is very relative. Dubai provides more opportunities for entertainment, sports, education and cultural development than most major cities in the world. A large number of exhibitions and cultural institutions work here, several districts are marinas for dozens of night clubs, concerts are regularly held, large-scale discos, events and shows, competitions for almost all sports (including traditional) are also organized here. At the same time, in Dubai, the sea and the airport are always at hand with the possibility of departure to any city in the world.
Property in Dubai: many of our compatriots have persistent delusions about buying and living here. These myths often prevent them from seeing the benefits that Dubai offers, and significantly improve their living conditions and financial situation.
In fact, it is difficult to imagine a person who cannot find something interesting in Dubai and realize his talents and abilities.
As we see, Dubai is not at all what it seems after watching news feeds. And as they say, those who have already settled here or made a “spare airfield” in the city, buying a property here and partially or fully moving here is one of the best decisions in their lives.
Dubai Property: 4 types of investment
If you are thinking about investing in real estate of the most beautiful emirate, it will be useful for you to learn about the main types of such investments and the advantages of each of them.
Dubai does offer one of the highest levels of real estate income, in terms of both the capital value of the property and the rental rate. It attracts investors to Dubai in the first place. Only here you can get up to 20% of rental income per year. In addition, the safety of investments even in an off-plan real estate under construction, protected at the state legislative level.
Creating the most transparent and effective system of control and accounting of transactions in the real estate market is one of the priorities of the Dubai Real Estate Regulatory Authority, the Land Department of Dubai and the Dubai Real Estate Regulatory Agency (RERA), its divisions.
Our choice is always and everywhere predetermined by our own goals and objectives, but also by our character, risk appetite, or, on the contrary, caution. How many people, so many opinions, but the set of those and others can always be reduced to a fairly narrow range of specifications. The same is true of real estate investments. There are four types of major investments in real estate in Dubai, depending on the purpose.
1. Invest portfolio “Speculative”
• The highest liquidity among all investment options in Dubai real estate;
• Protection against inflation due to increased capital value of the object;
• Investments in facilities under construction with the possibility of capitalization up to 30% or more per year investments from US $ 100 thousand.
• Loss of profits from using capital between withdrawing funds from one project to investing in another investment-attractive project;
• The likelihood that the construction time may be lengthened (although at the moment, the Dubai management is closely monitoring all pending or even frozen projects and returns funds to investors if necessary).
The Speculative portfolio is a highly liquid investment in residential / commercial real estate projects under construction in Dubai at the initial stage of construction (at the excavation stage), as well as ready-made secondary market projects, the so-called hot deals.
The choice of the investment portfolio is determined by three major factors: time, price and risk For the objects under construction, the same three main factors play a role: readiness to wait for the completion of construction, a certain risk associated with the fact that you are investing in something intangible (although recently Dubai developers reduce this risk to almost nothing), as well as the fact that the period of commissioning may be delayed, as well as the issue price. And one more nuance: in the case of the “hot offer”, it is necessary to make instant decisions and quickly make a deposit, which can also become a stressful factor.
The level of investment for this type of investment starts from US $ 100 thousand: the larger the amount of investment, the higher the dividends. This type of investment has the highest liquidity (taking into account the risk and timing), and the net income will be the difference between the initially invested funds and the market value of the property at the time of its resale (up to 15% per year).
Why are people willing to wait? Ask the investors themselves. Igor Glazov from Astana, Kazakhstan, invested in Dubai because, in his opinion, real estate has a certain anti-inflation resistance: “Over time, because of demand, everything rises in price, like bread, gasoline, and cement, metal and other materials used during construction. And this quality [anti-inflationary stability] better than others protects the investor from inflation and protects the investment portfolio, unlike money in deposit accounts, which just because of inflation lose their purchasing power, and the percentages do not even catch up with real inflation. ”
Further, if you are a supporter of more conservative decisions or are not at all inclined to wait for the completion of construction, and in general you somehow don’t trust what you can’t touch, then the time factor becomes secondary. Now your choice is determined rather by your individual goals. Suppose renting is exactly what suits you.
2. Invest portfolio “Rent”
• Average rental income of 7–8% per annum; the possibility of investments from US $ 130 thousand;
• Capitalization of the object over time to 15% per annum;
• Less risky compared with the “speculative” investment portfolio;
• The ability to use property for their own needs and projects;
• Ability to choose among residential apartments, commercial real estate.
• Resolving issues with tenants; taking into account the timeliness of both the rent payment and the cost of maintaining the property; all risks associated with self-rental;
• Periodic decrease in the capital value of the object itself, which, however, on an annualized basis results in an increase only.
If you buy property in Dubai with the main purpose of renting, then you can use the “Rent” package, a stable investment in luxury apartments in Dubai, bringing year-round income in foreign currency. Ready-made housing for furniture or luxury furnished apartments, with all the amenities of a modern residential complex, or office and retail space – this is what Renta investment portfolio offers.
“Why did I invest in Dubai? – Asks investor Sergey Dolmatov from Moscow: – First, from all real estate operations in Dubai (business use, sales, rental) there is a stability of income (in comparison, for example, with securities, if, of course, they do not speculate). For example, in 2011 I bought two two-bedroom apartments (with one bedroom each, as they say here) in the JBR area. Then they cost 1 million dirhams each. These apartments are somewhere between 68–70 squares. In 2014, these apartments were worth on the market already at 1.5 million dirhams, that is, their price increased by almost 50% over three years. Plus, from the delivery of all three years, I had an income of 7% per year. Today, the market value of apartments has fallen somewhat, somewhere by 10% per year, but these are the conditions on the market now. I am sure that by the end of the year my apartments will again add 10–15% to the price, so I am calm. ”
But back to the investment. Sea, sun, sleepy bliss, year-round beaches! Dubai is truly a tourist (and not only) paradise, which we will talk about later. And if you do not want to think about any domestic problems in this paradise, if you become a “landlord”, choose the “Warranty” package.
3. Investpackage “Warranty”
• Acquisition of hotel property in the property at a price of US $ 250 thousand;
• Guaranteed rental income in the area of 5-10% per year, depending on the project;
• Official agreement with the developer for the provision of all hotel services;
• Ability to use your property as a hotel room for yourself for 1 week per year;
• No problems associated with self-tenancy and occupancy control.
• After the expiration of the guaranteed income (from 3 to 7 years depending on the developer), various risks associated with fluctuations in the tourist market and the demand for the object (practically nullified due to the high need for hotel rooms, insufficient offers and the inclusion of your property in pool).
The very name of this investment portfolio suggests that it was created for people who are cautious and quick-witted, but aimed at a guaranteed result.
If you need only net income, choose this investment portfolio, which mainly consists of hotel apartments, with all the benefits and advantages that follow. Buying a hotel property is the easiest way to invest, sometimes even not requiring your presence in a sale transaction. In the future, the hotel chain or tour operator will take over all the problems, including control of the level of occupancy, in which these companies have specialized for years. So this type of investment can be called passive and guaranteed. He will bring you up to 10% per year.
What do the investors themselves say?
“It seems to me that the main purpose of investing in real estate, if it is not a job, is not so much earning as protection against hyperinflation. And in Dubai, it also brings excellent operating profit, ”investor Georgy Loria from Ufa shared his opinion. “So I bought a room in a Dubai hotel for 1.35 million dirhams.” By agreement with the developer, I will receive 10% per annum guaranteed, regardless of how he [number] will surrender. In addition, I myself can relax there for a week in a year with my family. ” What did we say? Right, passive income!
Of course, there will always be those who are not satisfied with any of the types of proposed options for the traditional classification of real estate investments.
Dubai real estate market is ready to offer the million plus investment portfolio to more than wealthy investors.
4. Invest portfolio Million Plus
• Investments from US $ 1 million in a hotel under construction at the completion stage or in a ready-made hotel property;
• Acquisition of a 3-4 star hotel in the property;
• Drawing up an agreement with the developer for further leasing of the entire complex with a guaranteed income of 8% per annum; capitalization of the object at the level of 10–15% per year.
• The need for constant analysis of the situation on the market (these risks can also be minimized by turning to professionals);
• The need for some personal control, since a project of this level already implies a high personal responsibility.
The investment portfolio of Million Plus, as its name implies, includes entire “profitable houses”, as former rentiers and landlords would say, cost from US $ 1 million. Or complexes of commercial buildings, offices, entire hotels, building land. This is a completely different level of investment, as they say, the highest level. For example, three and four star hotels in such areas as TECOM, International City, Deira, Al Barsha and Al Sufouh are now on the Dubai market. As a rule, these are already finished or under construction real estate at the completion stage on average of 100 or more rooms for each building. We are talking about investments for 110, 155, 275 million dirhams (US $ 30 million; US $ 42 million; US $ 75 million), but the liquidity of such investment objects is one of the highest. Will the tourism business be profitable? Suffice it to recall that the Emirate is committed to attracting 20 million tourists a year to Dubai by EXPO 2020. Perhaps that says it all.
Let’s listen to what the highest level investors say, millionaire investors. Indian investor Diraj Saluja, who has been living in a villa on The Palm Jumeirah for several years, believes that there is no better place to live than investment for Dubai. He says: “We must understand that investment in real estate of this level, from US $ 1 million or more, is not just a passive investment of funds. This is a business project that can be developed in order to continue to receive even greater profits from it. I have plans to purchase a hotel in the TECOM free economic zone. The developer gives a guarantee of 8% per annum of the lease for 5 years.
And then the market will show how the situation will develop. In any case, it is clear that the capitalization of such projects also remains at a sufficiently high level. ”
Undoubtedly, this investment portfolio, like the others, also has certain risks. But these are the risks characteristic of the whole situation on the market as a whole, the risks peculiar to any large business enterprise, which guarantee a high income in case of success.
If we have dealt with the types of investments, it remains to conclude only a summary of why you need all this. In addition to the financial side of the investment, which we hope has become obviously profitable for you, there is also an economic factor and a pure factor of prestige. Dubai is a fashionable place, hardly anyone would argue with that. This is a modern, astounding huge “project”, a project of the future for the whole world, an example of how you can even build a futuristic, functional and popular resort city, world trade center, an economic oasis and just a modern metropolis in one embodiment even in the middle of the desert. With only 5% of the UAE’s oil reserves, the emirate managed to become the first among its neighbors and turn the capital earned on oil into growth, creating its own future at the expense of them.
What else are we all looking for in a dream city?
Security, which in Dubai was built into a cult, a wonderful climate most of the year, the stability of the local currency – the dirham tied to the US dollar (which is extremely important lately), convenient transport infrastructure (remembered from Moscow traffic jams?), Created from scratch and immediately from taking into account all the needs of the growing city, low prices for the usual consumer basket (here they are quite low due to the abundance of cheap labor). Whatever you are looking for – peace in a villa by the sea, success in business at the crossroads of many trade routes in Asia, Europe and Africa, or just a good option for safe and passive allocation of your capital, and maybe all of this together – the answer will always be Dubai