The real estate sector represents 60% of the world’s leading resources and a large share of all national, corporate, and personal assets. In this regard, real estate investments deserve to be taken into consideration by any person or company looking for asset classes in which to invest part of its capital.
What is Real Estate?
When people hear the term real estate, some think of land, houses, or other types of buildings and structures. These are real estate components, but they are far from being a complete definition.
In this article we are going to list some other forms of real estate, and also things to consider when examining real estates in Dubai
Other Forms of Real Estate to Consider Investing In
Real estate in Dubai offers one of the best rental returns in the world, especially in new communities that offer better profits than most major cities in the world.
Recent research has shown that properties such as Belgravia, by Ellington Properties offers an average sales price of AED 995/sq.ft., which is 10.31% more compared to Jumeriah Village Circle with AED 902/sq.ft. As for Belgravia’s average rent price, it is set at AED 82.6/sq.ft, which is 28.66% more than Jumeirah Village Circle ( AED 64.2/sq.ft.). Belgravia rental yield currently sits at 8.914%, and its occupancy rate at 90% which is 23.2% more than Jumeirah Village Circle that has a 73.05% occupancy rate.
Moreover, Belgravia II offers an average sales price of AED 971.60/sq.ft., which is 7.71% more compared to Jumeriah Village Circle with AED 902/sq.ft. In addition, Belgravia II’s average rent price is AED 88.47/sq.ft., which is 37.8% more than Jumeirah Village Circle of AED 64.2/sq.ft. Belgravia II current occupancy rate is at 97% Vs. 73.05% for Jumeirah Village Circle.
The study also found that average rental yields in Dubai are better than in major cities, despite falling prices and sales in recent years.
Average rental yield at access points to global properties such as London is 2.7%, Hong Kong 2.4%, New York 2.9%, and Singapore 2.5%, all at a one only low level. While Dubai properties regularly post an average gross profit of over 7%.
Capital appreciation is the rise in the market value of the property compared to the purchase price. In general, buildings located in excellent locations, such as Belgravia and Belgravia II, demonstrate capital appreciation. These are the areas of choice for wealthy professionals who are willing to pay for their decision. Capital appreciation can also be observed in the regenerating regions or with new services offered. In short, the more an asset has, as property, the more likely it is to show capital appreciation.
What is the Return on Capital (ROC)?
In contrast, the return on capital occurs when an investor receives part of his/her initial investment, and these payments are not considered income or capital gains from the venture. Note that a return on capital reduces the correct cost base for the investor. Once the cost base of the stock is adjusted to zero, any subsequent profits will be taxed as a capital gain.
Now that we been able to explain some other forms of real estate to consider investing in real estate Dubai.
Let’s consider some steps in investing in real estate in Dubai
- Needs versus Wants
Before going into real estate, ask yourself: Should I buy a land or a house? Be sure to receive a resounding YES as a response in your head. If you have any doubts, probably because you don’t need it, then consider renting it. If you are still not sure of buying a house, you could also find other forms of real estate listed above.
- Prepare financially
Budgeting is one of the most critical steps in going into real estate. Obtain mortgage financing if necessary and make sure it is approved in advance. It is not a good idea to look for a property before trying to get the required financing needed.
Going into real estate is a vital decision, so make sure you are ready emotionally and financially. It is also essential to have a strong motivation to purchase and understand how to look for properties that meet your needs.
- Know What Matters
Make a list of your preferences before you start your goal; determining your preferences will significantly assist the agent in knowing what appropriate options should be offered. After offering you a few options, rank the ones that meet your needs.
Buying real estate requires a long process and can be a bit complicated, one way to shorten the process is to plan and organize
- Get a good real estate consultant
Once you’ve established your preferences, it’s time to select the real estate agent who works with you throughout the process, and better understands how the Dubai real estate market works. Please make sure you choose your real estate agent well, as the way they work together will significantly influence your bottom line. No need to rush to select a real estate agent, make sure you two are on the same page. A real estate agent will be of great help throughout the process and will be a great source of information. Do not hesitate to ask all the questions you need to know and to have constant and effective communication to avoid inconvenience.
- Conduct your research
The research will help you understand the reality and will prevent you from having exaggerated fantasies when choosing the real estate of your dreams. It will allow you to set reasonable appraisals and help you to know the market prices.
- Select a property that fits your budget
Limit all the options available and examine all the possibilities offered by the real estate agent and the opportunities for your investigation. Make sure you choose the property that best suits your needs based on your lifestyle, budget, and plans. Avoid making a sudden decision; after all, buying real estate will have a significant impact on your future.
Before hiring the services of a broker, each real estate investor must verify that the broker is correctly registered by checking the identification of the broker and the registration certificate of the brokerage firm. Moreover, the investor must check the authorized signatory of the brokerage firm, who has the power to sign the intermediation agreement.
In conclusion, real estate has evolved beyond buying lands and homes for personal use. Ensure to make use of other options listed above and to do your due diligence before buying one.
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- 7 Questions To Ask When Buying an Investment Property in Dubai
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