With Dubai house prices around three-year lows and expected to rise ahead of Expo 2020, now could be the ideal moment to get onto the UAE property ladder. Deciding where to invest and what type of property to buy can be confusing so we have put together some handy pointers to help you choose wisely.
From the part of investors, these communities generally offer lower yields than the newer emerging communities. 6% to 8% is most common for small to medium sized apartments.
This is still excellent by international standards and is more than double the interest you’ll pay on your mortgage. In these communities, furnishing the apartment and offering for short term rental can achieve excellent returns.
Having it professionally managed by an appropriately licensed agent is highly advisable. Short term management is a very different business to the leasing service offered by most agents in Dubai.
Short Term tenants come and go at different times for varying durations at weird and wonderful times of the day (and night), can leave a mess and be full of strange requests, all of which may be business-as-usual for a hotel manager but beyond the means of your average leasing agent.
Short term Management fees often exceed 20% but after you factor in higher vacancy rates, your net yield may still exceed 10%. Particularly for studios and 1 bedroom apartments.
In fact, most apartments in the UAE, excluding the very high end penthouses, will be positively cash flowed for investors purchasing with a minimum deposit of 20% to 25% + costs, even after you factor in all costs including mortgage interest, building management fees, DEWA, vacancy and maintenance.