Note: This is a sponsored article by Emirates.estate.
The Dubai Property market is like a mine full of potential gold and potentially worth a lot of money. Without further ado, you can buy apartments in completed residential complexes in Dubai or opt for projects still under construction. There is no direct and singular or best method to do this; you merely have to choose a transactional method that is best for you and not one you will get stuck in.
There are three major ways that investors have been using to get their foot in to the Dubai property market. Read on to discover further. Please feel free to adjust these suggested techniques to suit your needs.
The Investment for Rental Model
According to Emirates.Estate, the investment for the rental model is where a purchaser takes a property under any of the available plans to convert it into commercial use. The most typical use would be for rentals. Now, if this is your plan, you have to be keen on details and ensure that the original contract of sale does not have anything contrary to your intentions. You should review the contract in detail for the terms of use of the property. If necessary, do retain a lawyer for advice.
Upon purchase, you become the primary owner and landlord of that unit. However more often than not, your unit is a part of a larger one (in the case of condominiums), or at the very least least, a part of a larger community. As much as you have the right to dispose of the property as you please, you must consider the interest of those living with you. Sometimes, it is as easy as ABC. However if it is a residential premise and your plan is to rent it to another person, ensure that your tenant will also be using it for residential purposes.
You will get a clear picture of the do’s and don’ts of properties when you review the terms of purchase and the various conditions. The investment for the rental model is suitable for post-hand-over arrangements and instalment arrangements.
The Investment for Sale Model
The Investment for Sale model can be called the buy-to-resell business route. Here the purchaser spends his purchase money to acquire the property and then resell it upon its handover or so soon thereafter. Why should a person buy only to resell, you may ask? Well, there are many reasons, and for one, it is profitable to do.
Let’s consider a typical example: Mikael purchases property under an off-plan agreement that is to last for five years. The purchase price of Mikael’s villa at the time of the agreement is 2 million AED. The transaction does not choke or place him under any pressure because Mikael is allowed to pay in small instalments up until the handover date. Now, here’s the twist.
Upon handover five years later, the property has increased in value and is now worth 2.5 million AED. Such an investor will sell post-handover at that price, and what’s more interesting is that Mikael will recoup his capital at once with a handsome profit. That is a lot money for one to get in one shot!
The investment-for-sale model is very good for off-plan packages because it allows for the passage of time, which gives room for property-value appreciation, and it allows the investor to pay in instalments that are convenient, easy to fulfil, and practical. With this model, you would be doing real business without even feeling it on your finances.
The Joint Partnership Investment model
This is the third most popular option among foreigners in Dubai. The reason why this transaction type is popular and well-practised among the group of international investors is its convenience. Firstly, it is a known fact that foreigners are not allowed to own land/ landed property in many parts of Dubai. In those areas, full ownership of units by foreign nationals is prohibited. It is only in locations that are earmarked freehold/free zones that foreigners have the leverage to own properties or units with 100% ownership. Some of the popular freehold locations for 2023 include the new Port De La Mer, Jumeirah Village Circle, etc.
If foreigners wish to own property in the areas that are off the freehold zone, they need to do it in some form of partnership and joint ownership model with a native Emirati.
This form of ownership was more popular in the early days of the country’s internationalization, before many freeholds were designated across the city. Fewer people now see the need to do joint partnerships in real estate ventures because there are many alternatives to full and direct ownership. The only exception would be unless there is a very specific need for it.
