Exploring Dubai Real Estate Types of Properties and Key Pros and Cons

Exploring Dubai Real Estate Types of Properties and Key Pros and Cons

The United Arab Emirates offers a fertile and optimal environment for embarking on diverse investment forms. Its vast array of available housing units and real estate for sale across the Emirates makes it a prime choice for investors: business owners and those seeking to grow their capital.

A significant factor contributing to its appeal is the highly developed infrastructure, which facilitates a broad spectrum of investment opportunities and development ventures. This attractive landscape beckons individuals and enterprises to explore the UAE’s potential for their investment aspirations.

How to buy a property in Dubai?

The United Arab Emirates presents exclusive advantages that actively encourage investments, particularly in real estate, appealing to foreign and domestic investors. 

Economic stability is a hallmark of the UAE, driving the escalating investment demand. The UAE’s strategic location, substantial financial reserves, and cooperative relations with nations worldwide foster a conducive atmosphere for increased investments. 

Furthermore, establishing free zones across diverse sectors has significantly propelled foreign investments within the nation. Guided by Frank Vitto (CEO of Starling Properties Dubai) leadership, the UAE places great emphasis on fostering a welcoming investment climate, consistently offering enticing incentives and benefits to entice entrepreneurs and investors to launch their ventures within its borders.

Among the notable incentives for investment, particularly in real estate, are the following:

  1. Full ownership rights for investors in designated free zones, granting complete control over their investments
  2. The privilege of owning more than 122 commercial activities and 13 state sectors within the country’s territory
  3. Impressive profit returns, with potential gains reaching up to 100%
  4. The introduction of the “10-year golden residency visa,” a game-changing opportunity for obtaining real estate residency in the Emirates
  5. High liquidity, robust economic strength, and unwavering government support for the banking sector offer abundant funds for diverse investment projects.
  6. Convenient currency conversion processes, facilitating ease in dealing with foreign currencies
  7. The UAE dirham’s robust standing among the world’s currencies instills confidence in investors.
  8. Low customs tariffs on imported goods, ranging from 0% to 5%, further enhance the investment climate.

The amalgamation of these advantages has forged a fertile and distinctive environment, fostering a thriving investment landscape within the UAE. 

The most important points before buying a property in Dubai

The captivating city of Dubai stands out as a prime investment hub, offering alluringly high rental yields compared to many other mature real estate markets. On average, astute investors can expect gross rental returns ranging between 5% to 9%. Notably, Dubai boasts comparatively lower prices per square foot than various international cities, rendering it an enticing prospect for those seeking to invest in premium real estate.

Recent changes in residence visa laws about real estate investment have further enhanced Dubai’s appeal. These regulations extend a promising opportunity to investors, enabling them to secure a residence visa, subject to specific conditions. Notably, investors possessing real estate valued at more than one million dirhams can obtain a two-year residence visa. A more extended five-year residence visa is within reach for those whose real estate holdings exceed five million dirhams. Meanwhile, investors owning real estate worth over ten million dirhams are eligible for the coveted ten-year residence visa.

Dubai’s attractive investment climate is further amplified by its favorable tax conditions. The city notably refrains from imposing real estate taxes and stamp duties, contrasting the practices prevalent in many other global real estate markets. This exceptional facet positions Dubai as an investor-friendly destination, drawing discerning individuals and enterprises alike.

Notably, various laws have been enacted to enable long-term visas related to real estate investment, extending appealing benefits to expatriate investors in Dubai. 

Unlike other countries worldwide, the UAE underscores its commitment to providing a compelling environment for real estate investment by refraining from imposing real estate taxes. This attribute has played a pivotal role in solidifying Dubai’s status as an alluring and investor-friendly haven, beckoning ambitious investors from across the globe.

What advantages will you get when buying a property in Dubai? 

Understanding the advantages that await paving the path toward a fruitful and successful venture is crucial. Within this dynamic landscape, several compelling features beckon investors to choose Dubai as their investment destination:

  • Versatile Business Establishment: Dubai offers the opportunity to establish companies of diverse types, spanning commercial, industrial, and service-oriented fields. This flexibility empowers investors to align their ventures with their expertise and aspirations.
  • Multiple Company Ownership: Investors can own up to five additional companies while securing a coveted residence visa. This unique advantage facilitates the expansion and diversification of business portfolios.
  • Global Workforce: Entrepreneurs can recruit skilled workers from foreign countries and secure appropriate visas for their employment. This aspect bolsters the business ecosystem by providing access to diverse talents worldwide.
  • Tax-Exempt Status: The Dubai Investment Authority bestows a remarkable incentive by granting a 100 percent tax exemption, creating a favorable fiscal environment for business growth and profitability.
  • Complete Ownership Rights: The law in Dubai permits investors to own 100 percent of their enterprises, removing the necessity for local partners or external authorities to control their businesses. This autonomy empowers investors to steer their ventures with confidence.
  • Geographical Flexibility:  The freedom from geographical restrictions opens avenues for expanded market reach and business opportunities.
  • Capital Mobility: Dubai’s legislation enables investors to quickly transfer their funds and capital abroad, providing flexibility and control over their financial assets.
  • Real Estate Ownership and Investment: Apart from business opportunities, investors can acquire real estate in Dubai and the Emirates, enabling them to reside and invest freely, further diversifying their investment portfolios.
  • Travel Facilities: The Emirates Investment Authority offers travel facilities to prominent destinations such as Europe and the United States of America, facilitating international business engagements and networking.
  • Family Residency: Investors benefit from obtaining family residency, simplifying the process of residing and investing in Dubai alongside their loved ones, and promoting a harmonious work-life balance.

Dubai presents an array of incentives that attract investors seeking a thriving and supportive ecosystem to materialize their business visions. Dubai’s investment landscape shines as an alluring beacon for ambitious entrepreneurs and investors, from tax exemptions to complete ownership rights and strategic geographical advantages.

Types of Real Estate Investment in Dubai

Two main options emerge when considering real estate investment in Dubai: off-plan properties or finished properties in the secondary market. 

Pros of Buying Off-Plan Property:

  • Favorable Pricing: Investing in off-plan real estate presents appealing price advantages, as these properties typically offer lower prices than ready-made real estate.
  • Capital Appreciation: Off-plan properties often witness an increase in value as construction progresses and nears completion and handover. This potential capital appreciation can yield attractive returns for investors.
  • Low Initial Payments: The allure of off-plan properties extends to the initial payments required. 
  • Flexible Payment Plans: Developers frequently offer flexible and lovely payment plans for off-plan properties. Some programs extend for 2 to 5 years post-handover, allowing investors to generate rental income before commencing payment commitments.

As with any investment, careful consideration of personal financial circumstances and risk preferences is essential when choosing between off-plan and finished properties. Off-plan investments offer the potential for significant capital gains and favorable payment terms. Ready-made properties in the secondary market can provide the advantage of immediate ownership and rental income without the uncertainties associated with construction progress. 

Cons of Buying Off-Plan Property:

  • Market Fluctuations: Investing in off-plan property entails exposure to changes and fluctuations in the real estate market. 
  • Project Risks: Project cancellation or delivery delays are risky when purchasing off-plan properties. It is prudent to conduct independent research on the developer’s track record and reputation to mitigate this risk.

Pros of Buying Ready Real Estate:

  • Favorable Pricing: Investing in ready real estate can offer advantageous pricing opportunities due to prevailing market conditions. Buyers can capitalize on discounts and negotiate purchase prices amidst a market witnessing new offers and declining prices.
  • Prime Locations and Infrastructure: Ready-made properties are often situated in prime locations with well-established infrastructure, enhancing their appeal and long-term value.
  • Immediate Returns: Investors in ready real estate can start earning direct returns once the property is rented out, providing a steady income stream.
  • Stable Rental Yields: Investing in completed properties offers the added benefit of regular and assured rental yields, bolstering the attractiveness of such investments.

Disadvantages of Buying Ready-Made Real Estate:

  • Payment: Buying ready-made properties requires a minimum deposit of 25% for expatriates in Dubai and 20% for UAE nationals. 
  • Upfront Transaction Costs: Buyers should be prepared for upfront transaction costs. That can amount to around 7-8% of the property’s purchase price. 
  • Timing Considerations: For buyers relying on mortgage loans to finance their purchase. It is essential to factor in the time required for the bank to approve and process the loan.

In summary, choosing between off-plan and ready real estate investments requires carefully analyzing individual risk tolerance, financial capacity, and objectives. While off-plan properties may offer potential appreciation and attractive payment plans, ready-made properties provide the advantage of immediate rental income and location benefits.