Pros And Cons Of Investing In Real Estate In Dubai
For people who are into tourism and shopping, the first thing that comes to mind when mentioning Dubai could be the sun, the beaches, and the malls. The case is different for those who have an entrepreneurial mindset. Dubai is a great city for investment with its stable economy, hundreds, if not thousands, of visitors from around the world, safety, and the ever-growing landscape. One area, in particular, has attracted investors from around the planet to come to Dubai and start their project. Yes, you guessed it right. We are talking about real estate investment. If you are thinking about investing in real estate in Dubai, you need to know that this kind of investment has its upsides and downsides. Read on to discuss the pros and cons of investing in real estate in Dubai.
The Pros of Investing in Real Estate in Dubai
The great weather attracts tenants.
You probably supposed that the first reason we will mention would be high profitability. No, the reason that makes investing in real estate is always rewarding in Dubai. It is the weather! In Dubai, people can enjoy the sunshine throughout the year. It has a hot summer and mild winter. In both these seasons, there is a lot to do. Therefore, many tourists are in all twelve months. Yup! You will be fine finding tenants if you decide to rent out.
Free-tax income enhances profitability.
It is not only that the real estate investment can offer you a probability of 5 to 10 per cent per year, but also, it is tax-free! How great is that? While investing in one of the most important sectors in the city, you can improve your wealth without worrying about taxes.
High standards of living encourage more people to come.
It is a fact that Dubai is one of the most luxurious cities in the world. In this city, you can enjoy a style of life that you cannot enjoy anywhere else on the globe. With the advantages of having one of the best transportation systems, roads, and schools, many families are opting to relocate to this city.
Safety motivates people to choose Dubai as their resident city.
Living in Dubai means less worry for families. The rate of criminal acts is at a minimum. People can raise their children with utter peace of mind. So, many of them will seek a property to rent or buy here.
The real estate market is highly regulated.
The real estate market in Dubai is currently in a high position and shows no signs of slowing down. Instead, the government is increasing market transparency through new and updated policies and rules. Thanks to a new initiative from the Dubai Land Department, all real estate information is now accessible to the general public as of this year alone (DLD).
The Cons of Investing in Real Estate in Dubai
High standards of living mean an increased cost of living.
We mentioned earlier that the high living standards attract more people to relocate to Dubai. However, these high standards might discourage others because it means a higher cost of living. As a result, everything costs a lot, including but not limited to medical care and education. So if you are living on a tight budget, living expenses in Dubai can be a bit of a challenge.
The costs of purchasing a property are high.
Though there are no taxes to pay in Dubai, there are other expenses while purchasing a property that you need to take into consideration. First, you are required to pay 4 per cent of the value of your property by the DLD. It is the fee for transferring the property’s entitlement. Additionally, suppose you are financing the purchase of the property. In that case, you must pay DLD an additional admin charge equal to 0.25% of the purchase price.
Property maintenance means additional expenses.
The fees you need to consider are not just those mentioned before. Property maintenance expenses are also high. As an owner of the company is your responsibility to maintain it well. An association of owners or the management company usually estimates the amount you need to pay for maintenance. These expenses include waste collection, building security, and upkeep (parking, swimming pool, gym, Etc.). Depending on the area and type of residence, costs range from 3 AED to 30 AED per square meter.
The increasing number of properties can lead to a decline in demand.
We will not be exaggerating if we mention that there is a new building in Dubai now and then. Though there are always people looking to rent or buy, this could lead to a decline in demand in the long run. With many options to choose from, property prices could fall. This increase in numbers could be a challenge for investors of bought properties for reselling purposes.
Investing in the real estate sector in Dubai can be an enriching experience. With many advantages, this investment could provide you with a good yield. Yet, planning well before setting off on this investing journey would be best. If your plan is solid enough, you might grow your wealth without much worry. Now, it is your time to tell us what you would like to say about investing in real estate in Dubai. Are there any other cons or pros that you need to mention? Have you ever been through such an experience? Did you learn any lessons from it? Do not hesitate to share everything you know in the comment below. We really cannot wait to hear from you.