If you care about investing in the UAE as an expat, then you must have considered investing in its real estate market.
Dubai real estate continues to be one of the most popular in the world due to its high rental yield. It is no wonder then that local and foreign investors are looking to have a bite of the pie.
But how can you properly and profitably invest in the UAE real estate market as an expat? In this article, we consider 6 tips that will make your journey easier.
1. Choose the right location
The real estate market in each emirate in the UAE has its appeal.
Dubai is known for high rental yields, with many luxury and off-plan projects. It’s also a popular market with expats. Abu Dhabi is known for stability, which makes it appropriate for those optimising for capital appreciation.
Emirates like Sharjah and Ras Al Khaimah have low-cost properties, and growing tourism is also making them more appealing.
Your first task is to choose a location that aligns with your investment priority.
2. Conduct proper market research
Once an emirate matches your investment priority, you need to dig deeper into the drivers of its real estate market.
For example, if an emirate is known for its high rental yield, you should research whether current and future economic conditions can sustain such rents. Is the job market solid or waning? Are people creating new businesses or not? Is the middle class growing or shrinking?
Also, if capital appreciation is the unique selling point of an emirate, you need to ask if that can be sustained. Are families staying or moving? Is the average wealth level increasing or diminishing?
The answers to these questions will help you decide if an emirate in general and a community in particular is worth investing in.
3. Have a budget and financial plan
Before exploring available properties, you should have a budget. If you are relying on mortgage financing, then the down payment you can raise will have a significant impact on your budget.
Also, understand that the market price of a property might not match its intrinsic value. The fact that the market price aligns with your budget does not mean you should buy it. You should conduct your valuation to ensure you are not overpaying for the property.
4. Conduct the legal checks
The first thing is to understand the legal status of the property.
If it’s a freehold property, you have full ownership rights. On the other hand, if it’s a leasehold property, ownership reverts after 99 years.
As an expat, you can purchase freehold properties in certain designated zones, including Dubai Marina, Downtown Dubai, Palm Jumeirah, and Jumeirah Islands, among others.
If you like a property and you are ready to proceed, you should verify the title deed, clarify clauses on the purchase and sale agreement, and familiarise yourself with mortgage regulations. If it’s an off-plan property, you should also confirm what rights you have in case of delays.
5. Involve a real estate agent
To make the process seamless, consider hiring a real estate agent. They can help you at different stages of the property investing process – getting good offers, negotiating terms, verifying title deeds, closing deals, etc.
6. Consider investing in REITs
Purchasing properties has its cons. Real estate properties are illiquid, and you might have to wait for weeks before completing a deal. Also, there are many costs (financial and non-financial) involved in closing a deal and managing the property after purchase.
If you want a more liquid and cost-effective way to invest in the real estate market, consider real estate investment trusts (REITs). These are stocks of real estate and mortgage financing companies. They are traded on the stock exchange market like every other stock.
In addition, REITs provide higher returns than physical real estate, which makes them a sensible option if you are learning how to invest money in the UAE.
You can purchase REITs in the UAE through Sarwa. On this platform, you can build a diversified portfolio of assets like REITs, stocks, bonds, crypto, gold, and silver, among others.
