How to Make Smart Real Estate Investments in Dubai

Ever since weathering the Covid-19 pandemic, Dubai’s real estate market has been on a remarkable upward trajectory. The year-on-year growth hasn’t only inspired confidence, but continues to showcase the enormous potential of the city for both investors and end users as a cosmopolitan with an incomparable lifestyle. So, it comes as no surprise that the world’s leading real estate property developers continue to churn out the finest projects, simply because people come here not just to work, live and play, but to stay.

In this piece, we will take a closer look at how you can make savvy real estate investments in Dubai. But let’s first dissect the three most common types of real estate investment options: off-plan, secondary properties, and branded residences.

Off Plan Market – Trends & Metrics

Any property that you purchase before the completion of its construction is classified as an off-plan investment. In 2023 alone, more than half of all property transactions were off-plan, which is a testament to investor confidence in the potential of Dubai.

The off-plan market has a diverse appeal. Buyers are enticed to the chance of more affordable beginning pricing compared to ready-to-move-in residences, as well as the possibility of property values increasing over the building period. This approach also allows investors to take advantage of flexible payment plans commonly offered by developers, which are generally designed to grow in unison with building milestones. Furthermore, Dubai’s important position on the global stage, supported by legacies like the Expo 2020, continues to stimulate economic development and real estate demand.

Going forward, the patterns from the previous year are expected to continue. With the government’s supporting policies and continuous infrastructure upgrades, Dubai’s off-plan property market is poised for another year of profitable possibilities, making it an appealing investment destination for both experienced and newbie investors alike.

Secondary Market – Trends & Metrics

In simple terms, the secondary market refers to developments that have already been launched, and handed over to buyers. The obvious advantage to investing in a secondary market property is the immediate availability of the unit.

Moreover, they are frequently found in established areas with a robust community and infrastructure. This means you have access to facilities like schools, hospitals, shopping malls, and public transit, giving you easy access to all amenities of life.

In terms of key insights, the secondary market, similar to the off-plan segment, has continued its ascent. Residential property prices have risen by about 8% year-on-year. Luxury homes, in particular, have experienced price increases of up to 12% since 2023. In a similar vein, the number of transactions has increased by 15% this year compared to H1 2023. The super-prime segment contributed significantly to this expansion, with a 20% uptick in sales. On the other hand, rental yields have been steady, with the more exclusive neighbourhoods seeing a modest increase in rental costs due to strong occupancy rates and rising demand from expatriates.

Now, let’s put the spotlight on the rise of branded Dubai residences, which have been attracting plenty of interest of late.

Rise of Branded Residences

These are properties associated with renowned global luxury brands, who add their signature touch to the design, infrastructure and/or aesthetics. When you purchase a branded home, you are buying into the brand’s premium lifestyle. The brand itself contributes to the design and aesthetics of the residences as well as the management of the various facilities.

Dubai stands tall in leading the way for branded residences globally. Insights from the recently concluded ‘The Future of Branded Residences’ revealed that in the next five years, the total number of projects will jump from 51 to 121, illustrating a massive jump of 137%

Now that we have an understanding of the three types of property segments, let’s take a look at the key factors that you should take into account before making an investment.

Market Research

This should be the rule of thumb for taking any major investment decision in life. But when navigating the ever-evolving property landscape, research becomes all the more important. Conducting detailed market research allows investors to assess the project’s potential success and sustainability. It’s critical to evaluate the developer’s track record, economic situation, and history of project completion.

Evaluating the developer’s qualifications and previous projects might shed light on their dependability and building quality. Additionally, analyzing current market patterns, future development plans in the region, and economic considerations can aid in predicting property value appreciation and demand.

Mitigate Risk

Investing in an off-plan property, secondary or a branded residence involves a number of risks, including project delays, changes in market circumstances, and potential departures from early plans. Building delays might be caused by financial concerns, changes in building rules, or other unanticipated factors, all of which can have an impact on predicted ROI. Market changes might also have an influence on the property’s worth after completion. Diversifying your investments and staying on top of local real estate and economic changes might help to avoid some of these risks.

Consider the Legal Angle

As an investor in an off-plan project, you should be aware of the appropriate legal documents, such as the sales agreement, which should include the project completion date, payment plan, and property specs. It’s also critical to establish that the project is registered with the DLD and that the developer has an escrow account to protect investors’ cash.

If you are buying a secondary market property, it’s best to seek assistance from a qualified real estate agency/broker to navigate the entire buying process smoothly.