Are you about investing in real estate in Dubai but you are being skeptical? If YES, here are 10 pros and cons of buying a property in Dubai.
Real Estate is one investment venture that has had its ups and downs particularly in Dubai, but within the past few years it has proved to be stable. Purchasing a property can almost halve your rent, provide you with double digit rental returns and provide massive capital growth. The pros and cons of buying real estate are different depending on whether you are buying to live in or as an investment asset.
When you own your home, you can truly make it yours; you can renovate and decorate it to reflect your own personality, style and way of life. You can also put time and effort into making it special, something people are not advised to do with rental properties.
If you have bought wisely, you should be paying bank payments which are well below what you would be paying as rent. If you have a fixed mortgage, then the same amount will go out of your account each month (no more than one cheque in advance).
But you should know that purchasing your own home does make your situation a little less flexible than if you were renting. It might be harder to upgrade, downgrade or move locality – although selling and buying property in the Dubai is a very quick process.
Note that when you are buying a property in Dubai as an investment, you have the holy grail of all incomes: passive income. One key advantage of real estate as an asset is that banks will lend money against it (taking security over it), even for the average person.
The fact that banks will lend to you to purchase an investment asset allows you to buy a much bigger asset than you would otherwise and so get better returns. Also note that rental returns when used wisely can give you double digit returns on cash, far better than anything you could get from a bank and a lot better than most other asset classes.
If you do have cash and are looking to invest, putting it in real estate is great. Your real estate asset may appreciate in value. Reports have it that the world real estate has gone up about 3.3 per cent a year on average since 2000 till the present day. Using the principal of leverage, even modest value gains look very attractive.
The recent real estate slump was caused by oversupply and a lack of demand and prices have dropped making people wary about investing. The best way to deal with real estate prices dropping is to control when you sell and avoid panicking and dumping it at the bottom of the market. Make sure you sell it only when you want to and ensure you never make a loss.
Pros and Cons of Buying a Property in Dubai
Aside from the architectural wonder and the prime location, there are a whole lot of factors why people would decide to or decide not to buy a property in Dubai. If you are planning to invest in real estate, consider the following advantages and disadvantages of buying property in Dubai.
PROS
- Stable Economy
Whether you are buying property in the Canada or in South Africa or investing in a particular piece of land/house, it means you are investing in that country’s economy. It is always advisable to consider the economic growth of that region and note if the growth graph is dwindling or growing before investing your money.
Dubai’s economy is one of the most overlooked factors when making a property investment. Report has it that the United Arab Emirates (UAE) has gone through various economic hurdles over the past decades and has remained stable and robust since then. Abu Dhabi may have suffered the blow of the oil crises, but Dubai emerged to stay strong economically in the whole MENA region.
Therefore, buying property in Dubai is a good investment choice as its market is resilient enough to withstand the economic challenges. Dubai being hailed as one of the fastest growing economies in the world is one of the primary reasons why you should consider buying property in Dubai.
- Innovation and Steady Technological Advancement
Dubai is already on its way to become one of the smartest cities in the world. Everyone knows how quickly development took place in the city, transforming it into a smart, modern and iconic city. Dubai is now synonymous with luxury. People travel to Dubai for luxurious holidays, people wish to work in Dubai and live an exciting life. If you buy a property in Dubai, you would be investing in the future.
Living in a modern & smart city translates to utmost convenience; and this is what Dubai wants its residents to experience. With improved public transportation system, advanced facilities and interesting entertainment destinations, more and more people find the emirate as the perfect place to own properties.
You can travel to your workplace with ease through its smart transportation networks. Enjoy the night away with leisure destinations continuously being developed in the city year after year. The Dubai government has been actively involved in developing innovative ideas and smart solutions.
- Safe and Stable Environment
Among the many advantages of buying property in Dubai, one is the sense of security that residents of Dubai enjoy. This is one of the major reasons why people relocate to Dubai. Crime is one of the things almost unheard of in the emirate, making it one of the benefits of buying property in Dubai.
An ideal property investment requires a safe community where parents can allow their children to play freely and where they can sleep soundly at night without worrying about buglers.
Note that aside from being equipped with the latest gadgets that can bust any criminal, Dubai has strict and stern policies against crime. Robbery cases are close to none and even petty road fights are resolved peacefully in the city. Being able to walk at peace alone in the night is one of the priceless benefits of buying property in Dubai.
- Happiness and Dubai Residency
One of the major advantages of buying a property in Dubai is getting a chance to get a residency Visa in the UAE. This comes with some criteria for residency which includes purchasing a property worth one million AED or more, no mortgage or financial assistance for the property purchase and the property must be conducive for occupancy. Residency in UAE entitles you to a lot of benefits, as opposed to being just a foreign investor.
Although it may sound hilarious but Dubai created a ministry of happiness in 2016. This goes a long way to show how seriously they take your happiness level. The basic duty of the ministry is to develop programs and policies to improve happiness levels of Dubai residents – simply put, they make you happy.
- Growing population
One of the biggest advantages of buying property in Dubai is that people from all over the world are coming here in search of better career and business opportunities. All these people need a place to stay after all, no one is going to stay in hotels for the rest of their lives.
Property project launches are estimated to increase as the population grows each year. There is no point having a property in a city where people are constantly migrating out of. That property wouldn’t yield you revenue.
On the other hand, investing in property in a city that has high influx of people would mean high return on investment. Dubai is a modern city where more than 150 different countries are residing and people from all over the world are going to in search of better career and business opportunities.
The Dubai Statistics Centre announced that Dubai’s population in January 2016 was 2.4 million and will reach 5.2 million by 2030. These numbers simply mean increase in demand for housing and properties. You would be glad to know that the average population growth rate of Dubai is 4.7% which coincides with its economic growth as well. Buying property in Dubai would be a great investment
CONS
- Lack of political stability
You have to understand that there is no such thing as politics in this emirate. Dubai is ruled by a single ruler. It is the same for all other Emirates within the UAE. It has always been the same since the British left the UAE back in the 1970s. This is known as Sheikhdom. It means that one man rules the kingdom.
- No democratic System of Governance
In Dubai or other Emirates in the UAE, the common man hardly has any voice. Most of the laws and rules can change by the minute to anything that favors the Emirate. Note that some of the long-term residents of Dubai do not align or concur with many of the Emirates laws and plans for the future, but they can hardly do anything. There is no concept of working towards the greater good of all in Dubai. It goes same for any place that is ruled by one authority.
- Efficient Neighboring resistance and Too much traffic and pollution
Dubai has almost broken all boundaries of its tradition and religion. It has taken strides toward modernity and liberalization. It is often said that Dubai’s main threat is not an external but rather an internal threat. The city is characterized by increasing rowdiness, resistance, traffic congestion, and pollution. If the population is not controlled by the authorities, it is going to take a wrong turn! Public transportation also calls for improvement.
- High-end Luxury properties
In Dubai, development plans now and later are mainly focused on luxury properties. But, the truth is that most of Dubai are middle and low class. Thus, it will not help many. The rents are pretty high and will continue to increase. Experts believe that the middle and lower classes will be forced to move out if things continue this way. Some of the impacts of this has been seen during the 2008 housing market correction in Dubai.
- Reverse Property Development Logic
The Emirate has consistently created demand all through the years. The model is built and then people come to buy it. First, one spends upfront building property in Dubai and then expect investors to come and buy it eventually. However, the big question is how long Dubai can maintain its reputation of being a big tourist attraction to draw investors from all over the world.
Conclusion
Generally, people want a property that has all the necessary facilities and which is situated near prime locations in this luxurious city. Finding such a property can be a difficult if you are not in touch with a trusted property broker. It’s advisable you leverage the services offered by a reliable real estate broker because it is the only way of finding a dream real estate property on a desired location in Dubai.