Looking to invest in Dubai’s Realty? Here’s what you need to know

The thumb rule of economics has always been – the lower the price, higher the demand. It’s a rationale that applies to every industry and real estate is no exception. For example, lower cost or affordable housing not only enjoys a huge demand but also offers a great opportunity to earn higher rental yields.

In a market like Dubai, which already offers attractive rental yields across most realty categories affordable housing options are now slowly gaining in significance, with demand escalating from the city’s mid-income group families.

It’s a category that has the potential of offering rental yields of up to 10%, assuming of course that the right property has been selected and at the right price. The icing on the cake is the potential for capital appreciation in the years to come.
   
Best Bet to Earn High Rental Yields
For those looking to earn stable rental yields over a long period, affordable housing may not qualify as a very upmarket investment bet, but the demand for homes in this segment is consistently high with the annual contract structure making it a safe bet in a virtually untapped market.

A vacant, well-maintained apartment offers the perfect avenue to earn a steady rental income for landlords. While the lower rent is an attractive proposition for potential tenants, the sustained demand and potential for steady rental returns are an attractive value proposition for landlords.

Realising its potential, developers and the government are looking at augmenting available options in this category. Already several high yielding properties with excellent connectivity options across communities like – Dubai Sports City, JVC and IMPZ - have set a positive precedent that is expected to be replicated with several new projects going forward.

UAE’s tax-free economy is expected to be another major growth driver for upcoming projects in the affordable housing segment. For investors, this translates into higher earnings and capital appreciation sans any capital gains tax.

With the prestigious Dubai World Expo 2020 around the corner, the timing appears to be perfect to showcase the many benefits of investing in Dubai’s lucrative property market, not just for the existing investors but also the approx 20 mn visitors that are expected to congregate here for the World Expo.

Best Investment Locations Across Dubai:
So if you’re an investor looking to tap into the high-earning and value proposition offered by Dubai’s property market, here are some of the best investment locations that you should be looking at.

Downtown Dubai:
This is mainly Emaar territory and home to world-class attractions such as the world’s largest mall and tallest tower. Properties here are much sought after and are quite expensive. On average you would need to invest about Dh2 million to buy a One-Bedroom Apartment in Dubai Downtown, although there are still options as low as Dh1.5m.

Emaar is one of the most popular developers here for several reasons; it builds quality units, it has come through the downturn relatively unscathed, and it delivers on its projects. Buying a 1BHK apartment in Dubai Downtown would ensure that your rental income is fruitful. With several up-coming projects, such as an exclusive opera house and an extension to The Dubai Mall, Downtown offers excellent scope for capital appreciation going forward.

Business Bay:
Relatively cheaper than Downtown, Business Bay has the potential to deliver higher value, given its lower base.  The main developer here is Dubai Properties, but the area also has many other private developers.

Expect to invest about Dh1.5m at an average, however, a 1BHK apartment in Dubai Business Bay can also be found under Dh1m. The area is being groomed as a fashion central with many designers looking to set up base here.

Conveniently located next to Downtown with a metro station next to Sheikh Zayed Road, Business Bay is a sought-after location among young, working professionals employed with companies in Business Bay or Downtown/DIFC areas.

Marina/Jumeirah Beach Residence:
The Marina is another outstanding development by Emaar while the Jumeirah Beach Residence (JBR) is a project of Dubai Properties which also features – The Walk – arguably Dubai’s most visited spot after the fountains at the Mall of Dubai.

The JBR and the Marina are major contenders for capital appreciation. The Marina Walk is a massive development with the addition of “The Beach”. This is a retail heaven with an array of dazzling restaurants, cafes, high-end shopping and a cinema complex.

The price tags for a 1BHK apartment at JBR depend mainly on the view it offers (community, sea or marina) and start from approx Dh1.3m-plus. On the other hand, a 1BHK apartment at Dubai Marina averages approx Dh1.3-1.4mn, with select units available for under Dh1 mn.

Palm Jumeirah:
Nakheel is the main developer here while one of the biggest developments here is - The Palm - with its 4,000 luxury villas and spacious apartments offering expansive sea views with amazing facilities that include modern beach clubs equipped with gym, swimming pool and restaurants.
Proposed developments here include The Palm Mall, which is slated expand the retail and shopping options in the area post its completion next year (2016).  In terms of connectivity, the Al Sufouh tram will link with the Palm monorail, offering Palm residents direct access to Dubai Metro system.
One BHK apartments here begin from approx Dh1.5m, while similar units in newer developments here could set you back by approx Dh2m-plus.