The Dubai real estate market in the eyes of an inexperienced investor looks like an unassailable Everest. It seems that only experienced players are able to climb to the top. However, the market expert and realtor in DOM REAL ESTATE agency Elena Marchenko believes: you only need to find an experienced guide, and the top of the Dubai real estate investment market will be reached. And all it takes is to have $30,000 (but if you have more, it will be even better). For the coolest tips and winning behavior patterns of a Dubai real estate buyer, check out our article.

«There are investors who buy the whole floors with the apartments»

— How are things going in the Dubai real estate market right now? Tell us more about real estate prices in the primary and secondary markets.

— According to a report by ValuStart, a leading consulting group in the Middle East, the total revenue from real estate sales in Dubai for 2021 was about $41.1 billion. This figure is the highest in the market since 2009 and surpasses the 2020 figures by 110%.

The flexible investor policy was the starting point for the dynamic growth of real estate prices in Dubai. In 2022, the prices of premium-class housing rose by 35%, in the mid-price segment — by 37.2%, and in the low-budget segment — by 15.7%. In 2023, real estate prices in Dubai will continue to go up. This year, prices from developers have increased by 10%, and the prices of secondary housing rose by about 16%. In the rental market, there is also a rise in prices. 

The cost per square meter is influenced by many factors: the location of the residential complex, the area, infrastructure, distance from the tourist center, and transport accessibility. Previous years have shown that most investors are interested in real estate in coastal and tourist areas of Dubai: at such sites, it is easy to earn money renting out or reselling the apartment in the future. 

Prices for studio apartments in good neighborhoods start at $150,000. However, that doesn’t mean an investor necessarily has to have the full amount available. Buying property on the primary market, you can get interest-free installments of up to 7 years, plus developers often allow investors to resell by assignment while paying only 30 — 40% of the cost of the apartment.

— Taking into account these «reassignments» and resales, is it possible that the Dubai real estate market will burst like a bubble?

— Let’s start with a definition. A «bubble» is defined as a rapid rise in real estate prices to unfair levels, caused by an increase in demand over supply, followed by a sharp fall in supply.

Today, the Dubai market has the best ratio of rental rates and apartment prices in the world. The value of Dubai real estate is steadily increasing, justifiably because more and more expats and tourists are coming to the city.

The Global Real Estate Bubble Index, a study of real estate bubble risks in the world’s cities that analyzed the increase or decrease in property values and its indebtedness index, rated the risk in Dubai as one of the lowest. While Toronto, Frankfurt, Zurich, Munich, and Hong Kong have high risk indicators.

The competent policy of the Dubai Land Department suppresses unfair practices in the market and limits the amount and availability of credit in the housing market. All this leads to the stabilization and limitation of unjustified growth of real estate prices.

In addition, one of the most important factors why the bubble burst now doesn’t threaten the city — the growth and development of Dubai itself, its transport, financial and tourism sectors.

«No bank will give you 30% per annum profit, but Dubai real estate will»

— How much can I earn in the Dubai real estate market?

— It is possible to make money on Dubai real estate in two ways: on the resale of real estate at a higher price or on the lease of real estate. It is difficult to single out only one method as the more popular because each investor chooses the model of behavior that best suits him. 

If we are talking about the resale of real estate, then in this option, the investor usually buys an apartment in the house at the start of sales or the stage of the construction phase and resells it after the completion of any of the stages of construction. Prices from developers at the start of sales of liquid projects in the top areas in close proximity to the beach and the central part of town start at $ 350,000 for an apartment with one bedroom (layout type 1 +1). Typically, such projects by the time the complex is completed grow in price by 30%-50%. Plus, developers provide interest-free installments, which allows the investor to earn more on resale.

There are quite a few investors who buy an entire floor of a house, and this allows them to get the best price from the developer and get the maximum profit on resale. 

Group investment has become very popular, and our agency has developed a whole strategy for such a case. The essence of this strategy is that several investors with a small initial capital of $30,000-50,000, come together to purchase the property, and 6-12 months later resell it by assignment. The essence of this method is that you only need to pay 30-40% of the value of the property, and the profit can be up to 50-60% of the invested funds.

Clients who want to move into an apartment right away, or investors who want to make money on renting the property, buy an apartment on the secondary market in the case of a new construction on an assignment. As I said above, the cost of such real estate is about 30% higher than what you could buy at the excavation stage, but the benefit here is the fact that it can be immediately rented out and there is no need to wait until the construction is finished. If we are talking about short-term rental income, it can be up to 12% per annum, and in the long term — about 8% per annum.

By the way, not only residential real estate is popular with investors. Among the clients of our agency, there are many buyers of commercial real estate, and it is not surprising. Offices and commercial premises are purchased most often to lease, and the payback period of such properties is from 5 to 7 years, and the ROI is 15-20% per annum. As for the prices, the cost of a square meter here starts from $3000 per square meter — we are talking about liquid locations, which will steadily bring income.

— Tell me more about group investment: does it mean that you can come to the Dubai real estate market with $30,000, and that will be enough?

— Yes, that means that even $30,000 is enough to start investing in Dubai real estate and make a profit. To better understand what we are talking about, let me give you an example of this behavioral strategy (this is an example of the so-called flip deal — a quick resale):

A 45-square-meter studio apartment in the Business Bay area from top UAE developer DAMAC costs $329,000. To buy the apartment you need to make a down payment of 24%: $329,000×24% = $78,960.

In 6-12 months, the property increases in price by 10%: $329,000×10% = $32,900. Resale is possible after paying 34%, which would be: $329,000×34% = $111,860.

The return on investment will be $32,900/$111,860×100% = 30%. No banking institution will give you such a 30% interest rate. 

This is just an example of a group investment strategy, but it is not necessary to follow this particular model. DOM REAL ESTATE realtors can provide our clients with investment options for every purpose, whether it is to rent a home or to make a «flip deal» on a property of any value.

— What other interesting models are there in the Dubai real estate investment market?

— In the real estate investment market, the logic is simple: the more you invest, the more profit you get. Invested $100,000 — in 6-12 months you get $130,000. Invested $300,000 — six months later you get $390,000. 

So for large investors, we have the opportunity to redeem the floors, and we agree with the developer on the best conditions for our investor: discounts, and convenient installment terms for resale. For example, I will give the calculation of the floor at the same developer, which I mentioned earlier — Damac.

The cost of the floor with 8 apartments — $6 million. For the client, we get 2% discount — a total ~ $5.88 million. For the down payment, it is necessary to make 24% — ~ $ 1.41 million. In 6-12 months the property will increase in price by at least 10% — ~ $600,000. Return on investment will be: $600000/$1,410,000×100% = 43%.

The main advantage for investors is the ease of payment: bank transfer, cash payment, cryptocurrency, and, most importantly, the absence of taxes on both the purchase and resale of real estate. A bonus is an opportunity to become a tax resident of the UAE, to open a bank account, and obtain a residence permit. I am sure: investment in UAE real estate is a guarantee of safety and an increase of one’s capital.

The DAMAC BAY 2 project

«You Don’t Have to Keep Money Under the Mattress to Make it Work»

— What should the buyer be aware of?

— It should be understood that not all properties are liquid: there are apartments that are quite difficult to resell even with a 10-15% profit. And experienced professionals who have worked for many years in the Dubai real estate market immediately define such projects. For example, some buyers in the pursuit of low prices are choosing properties in old buildings (12 + years since commissioning), not realizing that the rent in such a house will not cost much, but the cost of maintenance and service of the facility will increase monthly. And, again, it would be extremely difficult to resell such an apartment. Dodgy brokers, as a rule, try to get rid of such real estate, convincing the buyer of its attractiveness, but in today’s world apartments in old districts of Dubai are a kind of «ballast» in the purse of the investor, which will never pay off.

But pitfalls can also be found in new buildings. Here, anything can play a «bad joke» with the investor: the location of the residential complex in relation to roads, highways, and infrastructure in Dubai, high utility bills in a particular project, or the inconvenient location of the apartment directly in the complex. That is why, in my opinion, you can’t get by without the help of a competent broker. Moreover, in the UAE, broker services in the primary market are free. 

Only a licensed expert, who knows all the information and understands the situation in the real estate market, can help you choose the right property. If the client comes directly to the developer, managers will tell only the pros but will hide the cons.

Our company DOM REAL ESTATE works with all the best and most trustworthy developers, creating stable partnerships, which is why we guarantee our customers the best conditions when buying. The experts of our agency make a selection of property options according to the purposes of the client, agreeing with developers on the best conditions for our customers.

— How do you start investing if you’ve never done it before?

— To make money «work», you don’t need to keep it under your mattress — you should invest and multiply it! One of the most promising and safest ways of investing money is real estate. I can say it with confidence since I invest money in real estate myself.

Some people think that investing in real estate is risky, and consider buying cryptocurrencies, shares on the stock exchange, or investing in business as an alternative. However, each of us wants profit and a minimum of risk now, and the huge difference is that investment in real estate is resistant to inflation, the cost of real estate in Dubai is only growing. And with the right investment strategy, you can double your capital. 

My colleagues at DOM REAL ESTATE and I are always aware of the situation in the UAE real estate market and the world in general. We share recommendations with our investors: which property to choose, at what moment it is better to resell it, and how to build a successful investment strategy.

If you have any questions, I will be happy to answer them in person in Dubai at any time or in Minsk from 17 to 18 of June. By the way, in Minsk in the Hilton Hotel from 17 to 18 June will be an exhibition of real estate company DOM REAL ESTATE on real estate investment in Dubai. There we will answer all the questions and present the most profitable projects that are now on the market.

If you still have questions, you can send an email to info@domrealestate.net or call +971585818449 (WhatsApp).

The DAMAC BAY 2 project