Risks and how to overcome them when investing in property in Dubai

Dubai is considered one of the fastest-growing cities in the world, and its real estate market is the most dynamic. The decision to purchase housing in Dubai is attractive not only in terms of residence, permanent or temporary but also as a profitable investment. The UAE is a paradise for investors because the taxation system here does not have taxes on income, as well as on property ownership. If you plan to buy a villa in Palm Jumeirah, or Downtown Dubai, then check out Ax Capital agency offers.

Risks when investing in the UAE real estate

Investing in the UAE comes with some serious risks and pitfalls:

1. There is economic risk: the 2020 oil crisis showed just how dependent the Arab oil monarchies are on oil. Oil resources are not eternal. The development of electric vehicles could eventually drain the emirate’s resources.
2. The condominium fee is not negligible. It is necessary to consider not only the gross rate of return but also the net rate of return after taking into account the costs of the condominium and other miscellaneous expenses.
3. Payment after delivery is not easily available for foreign buyers. You must have a bank account in the emirate.

When speaking about investment in Dubai, the investment area is essential. Marina Dubai and Business Bay seem to be more popular with tourists, but the rate of return observed over the long term seems lower than in other residential areas. However, the fall in prices in these areas is limited (in 2020, prices are even on the rise in Marina Dubai). On the other hand, it is advisable to remain cautious of the residential districts saturated by an overabundance of real estate constructions.

Advantages of investing in the UAE

Local legislation is very favorable for investors:

• The landlord may require the tenant to pay a deposit (free amount).
• The deposit will be refunded upon departure after deducting any repair costs.
• Non-Paid Rent Protection: Most landlords require a year’s advance payment, which limits unpaid rent.
• Drafting a sales contract in English and Arabic.
• Acquisition registration fee 4% of the purchase price (50-50, if other conditions in the contract).

The legislation which regulates the purchase and sale of real estate has simplified the procedure for processing transactions as much as possible. In addition, thanks to the control of the relevant authorities, you should not worry about their safety: it is almost impossible to become a victim of fraudsters there.

Additional expenses when purchasing a villa or any other real estate in Dubai are only 7%. This is an administrative and property registration fee, as well as a commission to the agency if the seller is not a developer. If the deal is concluded directly with the developer, then the additional costs will be reduced to 4%.

Property in the UAE

For whatever purpose you decide to buy a house in Dubai: for recreation, permanent residence, or renting out, you can choose the right option from the extensive offer in the primary and secondary housing markets. As for the second option, such real estate, as a rule, costs less than new. Visit Ax Capital website for plenty of offers in a wide price range.