Is UAE property easy to invest in?

See Cavendish Maxwell’s 2021 guide to property investment.

Investing in property in the UAE is a rewarding deal for both new and experienced investors. The Middle East property market is thriving, with real state investment in the UAE continually producing lucrative results.

The key to having easy success in the UAE is understanding how to invest in real estate strategically. In this simple guide to investment, we have pulled together our top 5 property investment tips to give you food for thought on your next property venture.

1) Understand UAE property laws

Before investing in the UAE, it is important to take the time to understand UAE property laws. There are different rules across the emirates, meaning that property laws in Dubai may vary greatly to guidelines in Abu Dhabi.

For example, in recent years, Abu Dhabi made changes to its laws governing property ownership, which now mean that foreign investors can buy property in designated free zones for the first time. Previously, overseas investors were only able to own leaseholds for up to 99 years.

Understanding these different rules is essential to the success of your investment. It is important to obtain professional expert advice to understand the limitations of the type of property and the areas in which you can purchase.

2) Know the difference between freehold and leasehold property

A leasehold property means that you will only have the title of a property for a fixed term and will not own the land on which the property is built. After an agreed amount of time, the property will revert back to the freeholder. The set term of the leasehold will vary from contract to contract and between regions, for example, in Abu Dhabi, leaseholds typical have a maximum term of 99 years.

In comparison, freehold property means that you have direct title ownership of both the property and the land it is built on. Having a freehold title ensures that the property is yours indefinitely and gives you complete control, allowing you to make changes to the property and freehold land as you see fit.

When investing in property, it is critical to determining whether the property is freehold or leasehold and to weigh up the pros and cons of each option. While a freehold property gives more control over the property, a leasehold property is also a good option for some investors – particularly for sub-developers of larger developments. Always speak to a professional about the ownership title of your investment to decide which type of property will suit your investment goals.

3) Research different UAE areas

Carefully analyse the different areas of the UAE to find up-and-coming property locations. Look at current purchasing and rental trends to ensure you are investing in the right type of property to attract as much interest as possible.

For example, for many years, trends showed that renters were interested in apartments for rent close to the Dubai Marina and other city-centre locations. However, as our Q4 2020 UAE Property Market Report demonstrates, many renters in Dubai are looking for bigger homes in the form of traditional villas and townhouses in areas such as Jumeirah Golf Estates and Jumeirah Park.

It is also important to look into new areas that are being developed. In 2021, Abu Dhabi was scheduled to have an upcoming supply of over 5,200 apartments and over 900 villas and townhouses within the first quarter alone. This offers plenty of opportunities for new properties and will attract growing interest from potential buyers or renters.

Look for the next biggest trend to get ahead of the property market and yield the biggest results, taking professional advice from experts in the UAE. The Strategy and Consulting team here at Cavendish Maxwell is comprised of some of the region’s most highly qualified data analysts, possessing a wealth of international real estate advisory experience.

4) Understand your duties as a landlord

If you are investing in residential property with the intention to rent it out, you must carefully consider the responsibility of becoming a landlord. It is not as simple as sitting back and collecting money from tenants each month.

From ensuring proper maintenance to arranging landlord insurance, renting out your property is a serious commitment that should be adequately researched. As a landlord in the UAE, you will have particular landlord duties to keep your renters safe and to comply with local laws.

Talk to other landlords in the area and seek legal advice on the obligations you will be subjected to, while also thinking cautiously about whether this is the right option for you. Aside from residential housing, there are plenty of other ways to invest in property in the UAE. Our Commercial Valuation team can assist you to understand your investment options in sectors such as education, healthcare, or retail.

 5) Assess your potential return on investment

Before making an investment, you must take the time to conduct adequate market research and competitor analysis. Look around the market to find potential hotspots and see what prices are being charged in these areas to ensure you find the right investment to yield the biggest results.

If you intend to rent out your investment property, calculating your renting yield is essential to understanding your return on investment. Assessing what rent value other landlords are charging for properties in a similar price bracket is a good starting point, however, a professional can help you determine exactly how much profit you can make.

Final thoughts

In general, investing in the UAE is fairly easy so long as you understand both the laws and market trends of property ownerships.

Many of the emirates have allowed both international and domestic investors to purchase freehold property in dedicated free zones. With proper research and understanding, investment in property in these regions can yield high returns.

For more in-depth advice and to discuss whether investing in the UAE is the right choice for you, contact us today to speak to our friendly and expert advisors who are more than happy to chat about your exciting new venture.