Off-plan Projects and Service apartments: Investment Options Even for Fussy Buyers in Dubai

Property in Dubai

Real estate in Dubai is considered elite, but this does not mean that it is available only to the richest people on the planet. Offers on the market differ in price and level of comfort, you can find both budget options and luxury apartments. The cost of apartments in Dubai Hills, or in Downtown can be quite reasonable, so think about investing in the market now.

Price growth in Dubai

If we analyze 2021, then Dubai showed a rapid growth – sales increased by 74% compared to the previous year. And in the first quarter of 2022, more than 18,000 transactions were made, which is almost 79% higher than last year. Experts make a favorable forecast for 2022-2023 – price growth will continue. Economy housing will grow by another 5-7%, and the premium segment – by 12-15%, ensuring not only the preservation of investments, but also their protection from inflation.

Profitability from renting out depends on the type of property, and on the type of lease – long-term or short-term. When renting out during a long time, the yield is on average 5-6%, short-term – 11-13%. Experts say that with proper choice and management, full payback occurs in 8-9 years.

Starting amount to invest in real estate in Dubai

USD 100,000 can purchase you a small studio of about 45 square meters. The cost depends on the area, the project, the developer, the status of the property – ready for occupancy or under construction. When buying a home from USD 205,000, you can get a resident visa for 3 years, and if the value of real estate is more than USD 545,000, then the visa is valid for 10 years. It can be extended an unlimited number of times while the property is owned.

Taxes and legal nuances

Dubai is also attractive because there is no need to pay taxes for owning real estate. Only 4% is paid once at the time of registration of the sale. If you want to sell an apartment, you do not need to pay taxes either. But there is such a feature – utilities and service fees must be paid a year in advance.

Renting out property is also easy. There are also no income taxes.

Long-term lease is issued for at least 1 year. You can conclude an agreement with the tenant yourself. But in case of a short-term lease, you need to obtain a license and cooperate with the management company, which will deal with all organizational issues, including finding tenants, their moving in and out, as well as maintenance. The company is usually paid a percentage of the transaction to make this.

Why Dubai, and not Turkey or Bali

There are plenty advantages of buying property in Dubai. As opposed to that in Turkey and Bali, you need to pay taxes on purchases and on income. Turkish real estate will also have to pay an annual property tax. In addition, only legal entities can rent real estate here during a short-term rent.

In Bali, you cannot draw up the usual contract of sale, only leasehold. This is the ownership of real estate on a leasehold basis. In Dubai, the buyer becomes the full owner. In addition, buying an apartment in Bali does not provide any advantages in obtaining a residence permit.

Off-plan projects in Dubai

Off-plan is the purchase of real estate at the construction stage. It is beneficial for developers to start selling before the housing is put into operation. Buyers also benefit – prices for housing under construction are lower than for finished ones.

Housing under construction can be bought 2-3 times cheaper than finished housing. And this is far from the limit of the benefits that can be obtained when buying a property at the stage of excavation. When the famous man-made island Palm Jumeirah began to be developed, some investors did not appreciate its attractiveness, while others invested and did not lose. Real estate has increased in price by more than 10 times. And there are a lot of such amazing ideas here.

There is another point – developers often offer to purchase such property in installments. The buyer pays a certain percentage of the cost of the apartment, and the rest is divided over several years. Payment plans may vary. They depend on the conditions offered by developers. For example, they may ask for a deposit of 50% or 10%. The rest is paid in equal installments.

It often happens that the property is ready for use even before the end of payments. The owner rents it out and continues to pay the rest of the amount. As a result, he is already earning, and gives part of the income to pay off debt. These are favorable conditions, especially if you are one of those who do not immediately own the full amount.

What is an “investment only apartment”

There is another category of real estate – service apartments. It is suitable for investment only and is a serviced apartment. It has everything you need – household appliances, furniture, kitchen. Such real estate is in demand among tenants, since hotel accommodation is not convenient for everyone, and it comes out more expensive. Therefore, service apartments are ideally suited as an investment property. But there is one caveat – the owner of the apartments can use them only 2 weeks a year.

When you buy a service apartment, you get a certain service. It includes cleaning, change of linen, towels and more. You can buy already fully equipped apartments, or you can independently make repairs in them and buy the necessary furniture, appliances, textiles. Both the owner and the agency can deal with moving in and out of tenants.

The following residential complexes are suitable to invest in a service apartment:

• Address JBR is a premium residence located on the coast of Jumeirah Beach. From the windows of the 77-meter tower, amazing views open up.
• Address Sky View is a complex that consists of two towers and is located in the center of the Downtown area. The houses are connected to each other by a unique Sky Bridge.
• Blue Waters – located on a man-made island, the infrastructure of which is ideal to rent out to tourists. Within walking distance there is the largest Ferris wheel, the beach, restaurants, a shopping center. Even one view from the window speaks in favor of this place.

Real estate agency in Dubai

Real estate agency Ax Capital helps to buy apartments, villas, penthouses. Each property can be thoroughly studied from anywhere in the world thanks to a detailed description, a virtual 3D tour and expert advice. You can attend the transaction in person or make a purchase online. Ax Capital also helps with issues related to residency, mortgages, installments and property management.