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Real estate investment in Dubai: how to invest money and not lose it

Real estate investment in Dubai: how to invest money and not lose it

The situation with the global pandemic has shown us that it’s reckless to be dependent only on a salary. In other words, without a financial safety cushion, it’s difficult for one to maintain a certain standard and quality of life during a sudden financial crisis. Therefore, an intelligent approach to budget management involves saving money by investing it. But the question remains, where is the best place to invest one’s money? Dubai offers many investment options to choose from and one of the most popular is real estate. The United Arab Emirates and Dubai, the largest city in the state, are the most attractive destinations for foreigners. In this article we discuss profitable investments in Dubai and whether it’s worth investing in villas here and whether there are more attractive options.


Preparing for investments

If you’ve got no experience or professional education, it’s difficult for you to make the right decision about where to invest your money. However, the first step in how to properly manage your assets and funds should be looking at a responsible way to spend them. In order to do this, you need to:

  • Have money available that will allow you to live for several months if you lose your job.
  • Count your money so that you can save monthly without affecting your quality of life. This figure should be from 10 to 15% of your total income.
  • Define your objectives. For instance, high-income profit projects are generally associated with high financial risks. Therefore, safe ways of investing money are more secure and preferable.

How to invest money to get passive income

Experts can’t answer the question of where it’s the most profitable to invest in. This is why you’re usually encouraged to choose several alternatives, which will allow you to save your investments. More specifically what this means is, if you encounter financial losses with one of your investments, you can rely on another. Also, when considering your investment options, you can look at several legal options such as:

Mutual funds

Mutual funds act as an alternative to banks and offer more affordable schemes. They can be compared with other types of investments that are associated with making a profit through securities or shares. For instance, a group of people entrusts the management of funds to one person with professional experience. There are several advantages:

  • The activity is protected by law.
  • The amounts for investment can be minimal.
  • All responsibility lies with the expert/professional and not with the investor.

However, it’s important to note that the human factor in this type ofscenario is crucial. Especially, since mistakes made by the manager can lead to the loss of the deposit. As such, profit and profit growth are difficult to predict, therefore it cannot be guaranteed. Also, a tax is paid on the income.

Purchase of currency or precious metals

This is another way to invest that requires an analytical approach. Given the high exchange rate of the most popular currencies, don’t expect significant profits in the short term. More specifically, this method of investing is simply another alternative to investing money. However, it’s not a quick way to grow your investment or to quickly increase your money.

Bank deposit

This is the most common type of investment, but not the most profitable. It’s usually used in situations when the free amount is not too large. This particular investment method helps you to keep your money within the limits of inflation set by the state. The advantage here is security since the state guarantees the safety of deposits and their repayment, while the main disadvantage here is low income.

Dubai photo

Expert tips: where to invest money in 2021

Those who have free assets want to have a proper income. So the best choice is to purchase a home and rent it out. This can be a property that’s a resort area on the sea coast of the UAE or it can be a bunch of houses abroad. Although, no matter where you choose to invest, foreign real estate will always be more attractive. This is because it allows you to get additional profit due to currency conversion.

According to Ian Goldin, Oxford University Professor of Globalisation and Development, property in Dubai has a great potential, especially considering Expo 2020. He noted a significant increase in property investment, and Cityscape experts agree with him.

Ian Albert, the chief executive officer at Collier, said that investors are actively buying buy-to-let properties to get passive income thanks to high rental yields. This trend is taking place all over the world as since 2008 demand for rental properties has increased five times. As for Dubai, return on investment has reached 30% that is why the UAE is expected to attract property from USD 350 to USD 450 bln.

According Dubai RTA, the Dubai strategic development plan for Dubai for 2040 will affect investment property greatly. Growth of the economic sector and an increase in workplaces will fuel the demand for property.

There are no limitations for investment. It means that you can acquire an apartment, house as well as commercial properties such as retail spaces, warehouses and hotels. Rentals yields vary from 7% to 10%.

So as you can see, there’s no universal answer to the question as to what is the most profitable to invest in and where. However, the logical conclusion seems to point towards the purchasing of property as being the most profitable step. Especially, since overall there are no financial losses and accommodation tends to become more expensive. As such, the investment cost will only grow in the future.

Investing in real estate abroad: Dubai, UAE

The UAE has a high demand for residential real estate. This can be seen in the country's steadily developing economy, despite the situation on the rest of the world. Further proof of this can be seen in the fact that up until 2021, foreigners preferred flats and apartments in the Arab country. However, the pandemic has since changed the idea of a comfortable life. As a result, villas and townhouses are more popular than apartments this year. So it appears that this is the obvious answer as to what’s the most profitable to invest in and where. Also, the pricing policy of the area is favorable and therefore allows one to purchase a house at a much lower price than in large cities in Europe or the United States. What’s more, the constantly growing demand guarantees the liquidity of the property. According to Emirates News Agency (WAM) the record number of property sales were registered in Dubai in the first part of November. The total value of sales reached AED 862,730,000. It means that the demand for property among investors is very high.

How to invest profitably abroad

This system works the same way as in your home country. Before investing though, it’s advisable to learn about the local market and get legal advice regarding this type of transaction. For example, in the United Arab Emirates, there are legal restrictions on certain properties where housing is available for foreign citizens. These are known as freehold zones, where one can own real estate by right of ownership. In other areas, only a long-term rental is possible for foreigners. But in the future, one will be able to:

  • Choose housing depending on the available budget.
  • Make a deal and prepare the necessary documents.
  • Pay both in cash and with a mortgage loan.

Where is it more profitable to purchase real estate in Dubai

In the UAE, the largest cities are Abu Dhabi, the capital of the state and Dubai, a popular tourism sector. The Emirate is considered one of the most developed cities in the world with its many modern buildings. What’s more, since the discovery of oil, the city has developed even more rapidly. Although, today it no longer relies only on oil production. The free economic zone attracts businessmen too. Those who want to move to a permanent residence in the UAE typically choose an area based on comfortable living conditions such as, developed infrastructure and climate. Also, since tourists visit here all year round to enjoy leisure and relaxation, there’s always accommodation available because it’s always in demand. Dubai is one of the emirates where it’s most profitable to invest.

The advantages of investing in housing are:

  • High profitability. The profitability indicator can reach 4-7%, depending on real estate. Apartments and studio apartments have the highest profitability. In large European cities, this figure doesn’t exceed 3%.
  • No taxes. Profitable investments pay off quickly and the owner receives a net profit when renting out accommodation. Here, there is also no property tax involved.

As of the end of the third quarter in 2021, the city observed the largest number of home sales in the last eight years with 43,299 homes sold for the total value of AED 104.3, which is USD 28 bln. The total value of property sales for the first three quarters in 2021 is 45.15% higher than in total sales in 2020.

Dubai photo

Investment features and frequently asked questions

The analysts of the country welcome financial injections into the economy from expats. The UAE Government is developing programs for simplified obtaining a residence permit for foreigners. This allows one to stay in the country for a long time when purchasing a home. For those who are interested in what’s better to invest in, there are several questions to consider with the most common being:

  • What to invest in if you have much money? You can purchase a villa or a house in Dubai and relax in it with your family or rent it out for the remainder of the time.
  • How much will you have to spend on the purchase? It all depends on the area, location, and comfort level of the accommodation. Prices for villas start from 300,000 euros onward.
  • Is it possible to apply for a mortgage? Credit funds may be the best way to invest. However, if you are purchasing a property on credit, you can get a residence permit only after completing the payments.
  • Are there any additional expenses when purchasing a foreign home? Yes, there is, because analysts provide for a registration fee of 4% of the price.

Ax Capital experts will help you to purchase investment real estate in Dubai

We offer professional advice and a comprehensive breakdown of the housing market, advising you to choose a suitable home and helping you to make the right decision.  our company's consultants/experts to guide you in how to properly invest in Arab real estate for 2022. We promise you won’t be disappointed and you won’t incurany losses. Go online now and check out our online catalog. It contains the latest ads from both developers and agencies, where you’re guaranteed to find your dream Dubai villa or townhouse. Don’t delay and contact us today!

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