How can a beginner conquer the Dubai real estate market? Tips and hacks from an expert.

Introduction to the Dubai Real Estate Market

The real estate market in Dubai may seem like a daunting peak for novice investors, resembling an impregnable mountain. There is a belief that only experienced professionals can achieve success in this segment. However, according to expert and realtor Elena Marchenko from Dom Real Estate, with the right mentor, becoming a successful investor in Dubai real estate is entirely possible.

For this, even $30,000 may be enough, although a larger capital reserve will make the task easier. In this article, we will explore key strategies and recommendations for profitable real estate investment in Dubai.

The situation in the real estate market

Real estate in Dubai is attracting interest from many investors, including those who choose to buy apartments floor by floor. What is the current situation in this market? Elena Marchenko provides interesting data on housing prices in both the primary and secondary segments.

According to a study conducted by the consulting firm Valustart, the total revenue from real estate transactions in Dubai in 2021 amounted to approximately $41.1 billion, marking the highest figure since 2009 and demonstrating a 110% increase compared to 2020.

Factors driving the increase in housing prices

A loyal policy towards foreign investors is the foundation for the rapid growth of housing prices. In 2022, the cost of premium-class properties increased by 35%, the average price segment showed a growth of 37.2%, while budget apartments rose in price by 15.7%. Forecasts for 2023 suggest further price increases:

• The prices for new real estate properties have increased by 10%.
• Secondary housing became more expensive by 16%.

The rental market is also experiencing a trend of rising prices. Various factors, such as the location of the property, the infrastructure of the area, and the availability of public transport, play a significant role in determining the price per square meter.

Investments in coastal and tourist areas

Recently, there has been a growing interest among investors in properties located in the coastal and tourist areas of Dubai, as these investments offer excellent opportunities for rental income or profitable resale. The price of studios in popular areas starts at around $150,000.

But this does not mean that an investor needs to have all the funds at once. When buying on the primary market, you can get interest-free installments for up to 7 years, and many developers offer the possibility of resale by assignment of rights after paying only 30-40% of the total price of the apartment.

Risks in the real estate market

There is an opinion that mechanisms such as "assignment" can create risks of a so-called "bubble" in the Dubai real estate market. To begin with, it is important to understand the essence of this phenomenon. It can arise in a situation where demand significantly exceeds supply, and property prices soar.

Nevertheless, current economic factors, including significant interest from foreign investors and government support, give hope for market stability in the long term.

Conclusion

Nevertheless, before making an investment decision, it is crucial to conduct a detailed market analysis, familiarize yourself with current offerings, and, of course, seek advice from experienced professionals. Developing the right investment strategy will help reduce risks and ensure the expected returns.

Making the right investments in Dubai real estate can be an important step towards financial independence and a stable income for the future.

The concept of "bubble" in economics

In an economic context, the term "bubble" describes a situation where housing prices rise sharply to an unjustified level. This occurs due to a significant increase in demand against a backdrop of limited supply, followed by a sharp decline in prices. Currently, the real estate market in Dubai demonstrates one of the most favorable rental-to-property value ratios among various countries worldwide. Property prices in this emirate are steadily rising, which can be attributed to the increasing number of foreigners and tourists choosing Dubai for living and vacationing.

Risks in the real estate market

Recent research conducted by the Global Real Estate Bubble Index to analyze housing market risks in various cities has shown that the probability of a bubble forming in Dubai is one of the lowest on a global level. In contrast, cities such as Toronto, Frankfurt, Zurich, Munich, Zurich and Hong Kong face high risks, indicating the volatility of their markets. The policies implemented by the Dubai Land Department play an important role in preventing fraud in the market and limiting the amounts available for mortgage loans, which in turn helps to keep the situation under control and curb unreasonable price increases.

Key factors of stability in Dubai

One of the key factors confirming that there is no bubble risk in Dubai is the active development of the city. Continuous growth in areas such as:

• transport
• financial sector
• tourism

is crucial for maintaining a stable economy in the region. Many experts argue that:"No bank will offer you 30% APR like real estate in Dubai can do.".

Ways to make profit in the real estate market

Now let's look at ways to make a profit in the Dubai real estate market. There are two main approaches: selling real estate at a higher price and renting it out. It is not easy to determine which strategy is more popular, as each investor chooses an approach that suits their financial goals and the market situation.

Reselling real estate

When it comes to resale, the investor first of all buys an apartment at an early stage of construction or even before it is started. Once one of the construction stages is completed, he sells it at a significantly increased price. As a rule, the initial prices from developers for quality projects located in prestigious areas near the beach and the city center, starting at 350000 dollars for a one-bedroom apartment (layout type 1 +1). The cost of such properties may increase by 30-50% by the time of construction completion.

Opportunities for investors

Additionally, developers often offer interest-free installments, which expands opportunities for investors to resell and significantly increase profits. There are quite a few investors who decide to buy an entire floor in a building, which allows them to obtain the most favorable conditions from the developer and, consequently, maximize their income from subsequent resale.Investing in Dubai real estate looks attractive and profitableWhat makes this market interesting for various categories of investors.

Group investing

In recent years, there has been a growing interest in group investing, and our agency has developed a unique strategy for its implementation. The essence of this approach lies in bringing together several investors, each with starting capital ranging from $30,000 to $50,000, for the collective purchase of real estate.

After a period of 6 to 12 months, they can sell the acquired property using the assignment system. It is noteworthy that only 30-40% of the full value of the property is required to complete the transaction, while the potential profit can be between 50 and 60% of the invested funds.

Real estate selection

Clients who wish to move into new housing immediately, as well as investors looking to earn rental income, are considering options in the secondary real estate market or new developments with a notice of resale potential. The price of such housing can exceed the market value by 30% compared to properties available at the completion stage of construction.

However, there is an important advantage here - the possibility to start renting immediately and no delays associated with the completion of construction works.

Return on investment

When it comes to profitability, short-term rentals can yield up to 12% per year, while long-term rentals provide an income of about 8% annually. It's important to note that investors are interested not only in residential real estate.

In our agency, we have many clients who also invest in commercial properties, which is quite understandable. Most often, office and retail spaces are purchased with the intention of subsequent rental. Such properties can pay off in 5–7 years, and the return on investment, measured by the ROI indicator, reaches 15–20% per year.

Commercial real estate prices

As for the prices of commercial real estate, the rate per square meter starts at $3000 in areas characterized by high demand and stable profit.

And now more details about group investing: is it really possible to start your journey in the real estate market in Dubai with just $30,000? Yes, you understood correctly: just $30,000 is quite enough to take the first steps in investing in Dubai real estate with good chances of getting your investment back.

Example of a strategy: flip deal

To get a clearer understanding of this approach, let's consider an example of a strategy known as a flip deal — a quick resale of real estate.

Investments in collective entrepreneurship

In the world of collective investing, there are a number of different strategies that can be considered. However, it is important to remember that there are no universal rules that must be strictly followed. The team of specialists at Dom Real Estate offers its clients personalized approaches that take into account various types of investments — from residential rentals to commercial real estate transactions.

Principles of investing in the Dubai market

When evaluating potentially promising investment models in the Dubai real estate market, it is important to understand the main principle: the more you invest, the higher your potential profit. For example, if you invest $100,000, you can expect a return of $130,000 after six months. With an investment of $300,000, the expected profit could reach $390,000 in the same timeframe.

Opportunities for affluent investors

For affluent investors, expanded opportunities are opening up, such as purchasing entire floors from developers. In this context, we work directly with developers to provide our clients with the most attractive conditions, including favorable prices and flexible installment plans for future resale.

Example with the company Damac

Let's consider a specific case with the company Damac, which was mentioned earlier. When the price for a floor with eight apartments is around 6 million dollars, we can achieve a 2% discount for clients, which will bring the price down to approximately 5.88 million dollars. In this situation, the initial payment will be 24%, which is equivalent to about 1.41 million dollars. Notably, within a period of six months to a year, the value of this property can increase by at least 10%, which in monetary terms will amount to around 600,000 dollars. Thus, the profit from the investment can be calculated as follows: 600,000 / 1,410,000 × 100% = 43%.

Convenience of calculations for investors

One of the main advantages for investors is the convenience of transactions. You can use bank transfers, cash, or cryptocurrency for payments. It is especially important to note that there are no tax obligations when purchasing or subsequently reselling real estate. Additionally, there is the opportunity to become a tax resident of the UAE, open a bank account, and obtain residency. I am confident that investing in UAE real estate is a reliable way to preserve and grow your assets.

Risks and liquidity in the real estate market

Returning to the Damac Bay 2 project, it is important to emphasize that for a successful investment strategy, it is not only crucial to preserve capital but also to effectively grow it. There are several risks that potential buyers need to be aware of. It is important to remember that not every property has sufficient liquidity. There are apartments that may be difficult to sell, even if their value has increased by 10-15%. Professionals with experience in the Dubai real estate market can quickly identify such less attractive options.

Selection of real estate

For example, many investors, trying to save money, choose apartments in old buildings (over 12 years old), not realizing that rents in such buildings are usually lower, while maintenance costs can increase each year. Moreover, selling such apartments often turns out to be a real challenge.

Problematic real estate and its consequences

In today's world, experienced brokers often try to get rid of properties that may raise a lot of questions. They attempt to convince potential buyers that such apartments have their advantages. However, it is worth noting that, as of now, housing in the older districts of Dubai is becoming somewhat of a "burden" for investors, as it can lead to financial losses.

Even new buildings are not always a guarantee of a successful investment. Buying such properties can lead to problems for a number of reasons, including:

• Location of the residential complex;
• Proximity to key transportation routes;
• Necessary urban infrastructure;
• High utility rates;
• Unfavorable location of the apartment in the building.

The need for professional help

In my opinion, getting help from a qualified broker in this situation is a must. It is very important to realize that in the United Arab Emirates, the services of a prime broker are absolutely free. A licensed professional who has all the necessary information and is able to react quickly to market changes will help you find a really suitable offer.

If a client decides to contact the developer directly, they are unlikely to receive information about the real shortcomings — the conversation will only focus on the positive aspects, which can create a distorted picture.

Collaboration with reliable developers

Our company,Dom Real EstateThe company cooperates with the most reliable developers, creating strong partnerships with them. This makes it possible to offer clients the most favorable conditions when purchasing real estate.

We provide property selection services tailored to the specific needs of our clients, obtaining only the most attractive offers from developers.

How to start investing in real estate?

But how do you start your investment journey if you have no similar experience? In order for your money to start generating income, it needs to be invested, not just kept "under the mattress."Investing— one of the most reliable and promising ways to increase your savings. I state this with complete confidence, as I myself actively invest in real estate.

Comparison with other investments

Some investors may believe that real estate comes with certain risks, so they start considering alternatives such as:

• Cryptocurrencies;
• Stocks in the stock market;
• Investments in business.

Nevertheless, we all strive to minimize risks and achieve quick profits. Interestingly, investments in real estate are significantly more resilient to inflation and maintain their value. Property prices in Dubai tend to rise, and with the right investment approach, you can multiply your funds.

Monitoring the real estate market

My coworkers and I at the companyDom Real EstateWe are closely monitoring the real estate market situation in the Emirates and other countries. We offer our clients useful advice on choosing the most profitable property, the optimal time for resale, and we develop effective investment strategies for the future.

Conclusion and suggestions

If you have any questions, I would be happy to meet with you to discuss them in Dubai at any time, as well as in Minsk from June 17 to 18. Discussing your needs and questions is an integral part of our work, and we strive to help you make the right investment decisions.

Conclusion

In conclusion, I would like to emphasize that the Dubai real estate market offers inexperienced investors unique opportunities that should not be ignored. Despite initial fears and the extraordinary scale of this multifaceted market, with the right advice and skillful strategies, anyone can become a successful investor.

Our analysis has shown that support from professionals in this field, such as consultations with an experienced realtor, can significantly simplify the process of understanding the market and making investment decisions.

Why is it worth investing in Dubai real estate?

• Price increase:Today, as real estate prices continue to rise and the demand for rental and purchase remains high, investors have every opportunity to profit from their investments.
• Flexible conditions:Convenient installment terms and flexible financial schemes offered by developers allow even those with limited funds to make the first steps in this attractive market.
• Minimal risk:Thanks to such reforms and the care from the authorities, the risk of a "bubble" forming is minimal, and confidence in the market's stability remains high over the long term.

And most importantly, I hope this information gives you a clear understanding of the opportunities that the real estate market in Dubai offers and inspires you to make informed investment decisions. Don't be afraid to start your journey into the world of real estate — with the right strategy and support from experts, you can not only invest successfully but also enjoy the results of your investments in the future.

Remember that every successful investor was once a beginner, and maybe the next successful investor will be you.