9 Ways To Invest In Real Estate In 2022

 9 Ways To Invest In Real Estate In 2022

The real estate market is a major contributor to a country’s economy.  In the case of the UAE, due to the enormous benefits and transparency of the market,  buyers are drawn like magnets to investment properties in Dubai.  According to an authorised source, “One main reason Dubai’s housing market remains relatively cheap compared with other world markets is because there is ample supply of homes to live in.” https://www.reuters.com/world/middle-east/dubai-house-prices-rise-modestly-stay-affordable-coming-years

Real estate agents in Dubai are aware of the many methods by which income can be generated by investing in property.   Given below are a few of them.

Traditional:  After the necessary steps in choosing the optimum property and settling on a price, the following need to be carried out:

  • negotiations for a mortgage, if necessary, 
  • payment of the deposit,
  • drawing up a contract between buyer and seller including all relevant details,
  • signing the Sale Deed,
  • applying for a No Objection Certificate,
  • registering the transfer of ownership with the DLD (Dubai Land Department).

Off Plan Property:   This building is in the development phase and construction work may or may not have started.  For those who are not in a hurry, the benefits are the lower cost and suitable payment plans to attract buyers.  However, research has to be conducted to ensure that the end result will be feasible.

  • Price understanding:  Check the price per sq ft to ensure that you are paying less than the market rate and whether it is for the total area or just the internal area.
  • Legitimacy:  Ascertain from RERA whether the property is registered.  An approved site plan can be obtained from DLD.
  • Location:  Find out about the location, with regard to upcoming development and amenities, as that will have an impact, whether you are going to live there or rent/sell the property.
  • Developer and Project:  Both should be scrutinised, to clarify the developer’s performance and dependability and the amenities of the project.  If an apartment, a group of buildings is preferable to a single building, as the former will already have the amenities and the ROI will increase.
  • Contract and Payment plan:  These should be verified in detail.

REITs (Real Estate Investment Trusts):  For those who would like to invest in real estate without buying physical property, REITs are the answer.  Quoting from a professional, “REITs have historically provided investors dividend-based income, competitive market performance, transparency, liquidity, inflation protection and portfolio diversification.”  Nasdaq is the international financial exchange through which domestic and international investments can be accessed.

Payment Plan Properties:  If there is insufficient finance for the deposit, options for payment are available:

  • Post-Handover:  The payment can be made after the property is handed over, subject to a percentage of the total price being paid before ownership is transferred.  It is feasible for those who wish to rent the property as they can pay back the amount from rental income.
  • Rent to Own:  A tenancy contract is signed between the landlord and tenant.  The tenant pays rental towards purchase of the property and becomes the owner once the terms of the contract are met.  The annual rent is usually higher than normal, but then it is like paying in instalments to purchase the property.
  • 10/90 plan:  A 10% down payment is made on the house.  The balance is paid in instalments mutually agreed upon.  The benefit is that the buyer can credit the property to his portfolio while still paying for it. 

REIFs (Real Estate Investment Funds):  The value of this type of property investment is by appreciation, rather than dividend payments.  They can be managed passively or actively.  There are benefits and incentives to encourage investment in various property projects as well as to attract international investment.  

Digital investment:  This involves the purchase and sale of property using virtual assets such as crypto investing, Bitcoin, etc.  The current VARA (Dubai Virtual Asset Regulatory Authority) law is aimed at growing and protecting investors.  However, any transaction has to be VARA authorised and the person wishing to conduct this type of business must have a presence in Dubai.  Rules and regulations must be implicitly followed.

Resale property:  If you cannot wait for a building to be completed, investing in a resale property could be the answer.  Some properties in popular areas are old and run down.  They will need renovation and refurbishing.  However, because of the locality, they are sure to have a good ROI.  The condition of the property and the costs of renovation have to be looked into carefully.   A MOU (Memorandum of Understanding) recording the agreement terms is a necessary document while buying resale property.

Holiday home for rent:  Investing in property to rent as a holiday home is another option.  Airbnb has proved to be a profitable investment.  With the number of tourists and holiday makers visiting Dubai, this type of investment has proved its worth.

Conclusion:  The UAE is one of the best places in the world to invest in real estate.  The government’s focus on a transparent real estate market makes it even better for investment.  However, the type of investment depends on the individual investor and his/her circumstances.  We hope the above ideas will help decide which method would be the most profitable for you.