Investing in residential properties in Dubai

Investing in residential properties in DubaiImage Credit: Supplied

Many people consider real estate as the most reliable asset to invest in. The sector has the potential to be quite profitable in the long run. Residential property investors see the long-term benefits that include the asset’s low volatility compared to equities and its ability to help diversify portfolios.

Most investors are exposed to the property market through buy-to-let homes, while owner-occupied housing has been the preserve of homebuyers not investors. Residential units are usually easy to rent, and the turnover in housing is higher compared to commercial units. As the leases are generally short, the investors can keep pace with the rental market as well.

The global economy is looking up again, and the positive mood is reflected in the residential real estate market. Investors show more interest in buying properties as the positive sentiment gathers momentum. The investor appetite in Dubai’s residential sector remains strong as the Dubai property market is considered a safe haven for global investors. However, the market continues to confuse investors. Thus, identifying the right market for property investment is easier if the investor looks for certain key market triggers. For this, buyers are advised to interact with reliable realty consultancies, and gauge the market’s current and future trends.

When it comes to investing in residential properties to live in, buyers appreciate the finest things in life. If you are buying a residential property with luxury amenities, you are buying it because you want the amenities. Buyers often rely on their gut instinct or emotion to drive their purchase decisions. Invest in property located in an area that is not likely to decline in case the growth slows down as there will always be a demand for it.

People who invest in residential properties for lease are advised to make sound investment decisions. They have to calculate the property’s capitalization rate to understand the return on investment (ROI). The primary financial objective of investing in property should be the annual income that the property can generate before the right time comes to sell it. Before making a final decision, investors must determine the annual rent they can expect from the property. The annual expenses of owning the property should also be estimated and compared with the annual net income.

Handy Hints
• Property buyers are advised to interact with reliable real estate consultancies
• They must also buy in an area not likely to decline in case of market slowdown
• Buy-to-let investors must determine property’s annual income before buying

Click on Key things to consider for more ideas in investing properties

Source: Yash Shah, Special to Properties
The writer is Property Sales & Leasing Manager, SPF Realty


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