Buying real estate in Dubai is not only an investment in one of the fastest growing and dynamic markets in the world, but also an opportunity to earn good money on resale.
Emirates legislation is the best in the world protects the rights of the buyer, and a mild tax climate (4% on the purchase and zero for ownership and profit) makes the country as attractive as possible for investors.
How to earn on real estate in Dubai?
No changes in the laws of the country are not planned: this is exactly the stable base on which you can rely. And yet, how not to make a mistake, making the first steps in the market?
Read also: A guide to investing in Dubai real estate
Choosing a property
The first step is, of course, choosing the property itself. Analysts advise to start from the area, taking into account transport accessibility, infrastructure and transport accessibility, as well as the emerging community. Do not consider the object separately, focusing only on the developer or attractive brochure of the LCD.
Dubai has a very wide range of housing - from apartments on the beach to luxury villas in gated complexes. Buying an apartment here is not easy, good offers find their buyers very quickly. "Objects of interest, in demand - they leave in a month. If the interest in the object is very high, even faster. It happens that apartments in some buildings are sold out in a few days", - shares his experience General Director of INTRUST Petr Raspopov.
The second step after choosing an object is to check the ownership rights. This is done through the Dubai Land Department (DLD). At the third stage, INTRUST analysts conduct a thorough assessment of the investment attractiveness of the building. This is a filigree work, taking into account many factors. The output is a detailed analysis focused on the future prospects of the area and the property.
"Our goal is for you to make money on the deal. We evaluate how much higher or lower the price is than similar finished housing nearby, how much apartments in the neighborhood previously cost from a similar developer. But most importantly, we need to see if the demand for housing in the neighborhood is rising or falling. If the market is cooling, there is a chance that resale housing will be difficult, "- says Peter Raspopov.
Determine the strategy
It is necessary to understand what strategy for profit you will adhere to. Already at the start you can and should lay a certain amount of profit. It is worth noting that the common strategy of "buy as early as possible and six months before the completion of construction to sell" practically does not work in Dubai. "But the strategy of buying fairly valued real estate and its resale at the stage of keys can give 10-20% per year, " - say in INTRUST.
The second common tactic is to buy apartments in sought-after areas at a fair valuation, or even below market, then renovate and sell. This can yield up to 30% profit per year.
The third way - exclusive buyout at closed sales from the developer and resale at the right time. This strategy can give from 20 to 30% profit.
In all cases, you need to work closely together with a company that understands the market and its trends.
Free cheese
Given the high demand for quality housing in promising neighborhoods, it is not profitable for developers to offer large discounts to buyers. That is, if you are offered more than 5% of the price, you should be wary. This means that the objects are either not sold and interest in the area is fading, or they are overvalued initially. The most favorable large concessions (but not more than 5%) can be obtained in Ramadan and before the New Year. The rest of the time it is almost impossible to bring down the price.
"Usually a discount from the developer in a good location is possible only at the initial stage. This allows the company not to freeze a large amount of its working capital in the construction," - emphasizes Peter Raspopov.
The general advice from the expert is to always turn not just to a real estate agency in Dubai, but to people who can be trusted. Their primary goal should not be a commission from the transaction, but to build a mutually beneficial cooperation aimed at your profit.
Competent assessment, constant study of the market and competitors, transparent system of selection of objects - this is what you should pay attention to when choosing a company. Official partner of leading developers INTRUST always offers the best choice, and you can make an application through a simple form on the company's website.
Technical side of the transaction
If the purchase is made with borrowed funds, it is necessary to obtain credit approval from the bank. Banks in Dubai have a number of requirements for buyers: a stable income, good credit history, age from 21 to 65 years old when repaying the loan and so on. Then there is only payment to the seller, the agent's commission (by agreement, but usually when selling in the secondary market at 2% get the broker of the seller and the buyer) and payment of state duty (4%). After registration with the DLD, the buyer receives a certificate of ownership.
The Dubai government is working carefully to create a safe and transparent environment for buying real estate. Emirates legislation provides a number of measures to protect the rights of buyers:
- all projects must be registered with the DLD;
- the deposit is placed in an escrow account until the transaction is finalized;
- in case of breach of contract on the part of the developer, the buyer is entitled to a full refund;
- strict control over the construction process ensures fulfillment of all obligations to the buyers.
The documents required to register the transaction with the DLD must be translated into Arabic and notarized by a notary or consul of your country.
Foreign investors are required to fill out a KYC form, this is Now Your Client. They must provide information on the origin of the funds. "Having said that, the procedure in Dubai, it is much simpler than in Europe and even more so in the US. Here, it's a regular written form. As a rule, for transactions up to 5 million dollars, banks do not appoint additional checks", - says Peter Raspopov.
It is worth remembering that English law applies in Dubai, accordingly, all transactions that have been conducted cannot be canceled. "It is not like in Russia, that you can buy real estate and find out that two generations ago someone illegally acquired it, and therefore your transaction is invalid," - emphasizes the expert. The only exception is funds obtained by criminal means.
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After making a successful real estate purchase in Dubai, investors can consider renting out their property to generate passive income. This strategy can also yield good returns, especially in sought-after areas with high demand for quality housing.
Moreover, some investors may find interest in buying properties with potential for renovation and resale, following the trend of 'buy, renovate, and sell'. This strategy can potentially yield higher returns, provided the renovation is done carefully and sensibly to maintain the property's value.
In both cases, it is essential to have a deep understanding of the Dubai real estate market and its trends to make informed decisions. The guidance and expertise of a reliable real estate company, such as INTRUST, can be invaluable in navigating this dynamic market and realizing potential profits from property investments.
