Even in the context of a pandemic, real estate in Dubai still retains investment attractiveness for foreign buyers. The reason for this is the steady economic growth of the emirate, the almost complete absence of taxes, and a stable housing market. In total, for 2021, despite the difficult epidemiological situation, property sales reached 61,441 units, worth about 151 billion dirhams (41.1 billion US dollars), which was also the highest figure since 2013.
Each district of Dubai can offer apartments in Dubai Hills for sale in both the medium and premium segments. Real estate agency AX Capital will tell you which areas are the most profitable to buy real estate in 2023.
Selecting a suitable area
The choice of area when buying property in Dubai depends on many factors, the main ones being the cost of objects and the purpose of the purchase. The average ROI is 5.5-6%, while some areas and projects may offer ROI between 7.6% and 8.4% per annum.
In 2022, buyers and investors were looking for property in Dubai that combines quality, a high level of comfort, and a convenient location relative to key locations in the city. Wealthy clients who wanted to invest in premium apartments and villas preferred popular areas: Dubai Marina, Business Bay, Palm Jumeirah, and Arabian Ranches. Let’s take a closer look at these areas.
Developers “cunning” with footage to attract buyers
There are many discounts and promotions in the Dubai real estate market, but they must be approached selectively. The latest trend is the reduction of footage. For example, a developer announces the sale of one-bedroom apartments at a price lower than that of competitors. But if you carefully consider the proposal, you will notice that the cost per square meter is the same, and the footage of the apartment is 10-20% less. At the same time, they make such layouts that you will not immediately feel the difference.
Small developers, offering lower prices, cut the area even more significantly – up to 40%. It’s hard not to notice. But many people turn a blind eye to this or do not understand why the price of a particular project is much lower than in all others.
You need to know that any developer has the right to make an error of 5% of the declared area. If you were promised an apartment of 100 sq. m, you should get 95 sq. m or more (otherwise, the developer will be required to pay the penalty).
The contract regulates the possibility of the resale of apartments under construction
You can invest in real estate in Dubai for a short period. For example, buy an apartment at the stage of excavation, and when the frame is built, sell it. The law does not prohibit this, but you must read the contract carefully: the conditions and possible restrictions are spelled out there. Usually, to have the right to resell an object, it is necessary to pay the developer 30 to 50% of the cost of the apartment. These restrictions were created to avoid large-scale speculative transactions (the maximum was in 2006-2007). Now there are fewer and fewer resales at the development stage.
Yield by type of property
Let’s analyze the profitability of real estate on the example of two groups of properties: residential and commercial.
Profitability of residential real estate:
- Low profitability of working housing. The worker housing sector sank the most for profitability for obvious reasons related to the role of international restrictions on movement. And Dubai is the country’s main commercial and industrial center and has been hit hard by the decline in migrant workers. The transition to remote work has led to a sharp drop in demand, and a drop in demand has led to a drop in prices across the sector.
- Uncertain profitability of elite residential real estate. This type of real estate has gradually reduced prices of constant oversupply for more than ten years. The pandemic has only exacerbated the existing problem. On the one hand, such a position is advantageous. Buying luxury real estate at low prices is a good option for investors. However, such an acquisition comes from the consideration of the rapid growth of the sector and profit based on the difference in the purchase and resale price of the object. And therein lies the main problem. Emirates luxury real estate has shown exceptional growth resilience among other global markets. Some changes only started happening in July 2022. Prices for villas began to rise, and quickly. Accounting for only 13% of the entire residential real estate market, this segment showed growth of 7% QoQ and 6.3% y/y. This property is more often bought than rented. You can buy it at a low price now and expect prices to rise in the future.
- High yield of family villas and apartments. The sector of family villas and apartments is the most popular among investors. Thus, from 2013 to the present moment, the average prices in the sector have increased from 81,700 to 217,800 US dollars. Large apartments also continue to exist due to high rental demand. In the current situation of decreasing influx of foreigners, the prices of these properties have fallen but remain profitable. Another worth noting is that this segment allows you to earn on resale in addition to earning from rent. A recent trend in the market relies on two reasons: the first is the increasing popularity of contracts, and the second is low mortgage rates. Large apartments meet this demand, and affordable mortgages allow more people to move from renting to buying property.
Help to buy a property in Dubai
Interested in apartments in Dubai Hills or other popular locations in the emirate? The catalog on AX CAPITAL contains apartments in Dubai and other premium properties from leading developers. Contact the company’s specialists to select ready-made or off-plan projects in Dubai.
