Experts from Cluttons consultancy advise expatriates to invest in real estate priced up to AED1.5 million in order to get a stable source of income in the long term.
Richard Paul, representative of the Cluttons Middle East analytical agency, believes that Dubai real estate units priced below AED1.5 million (USD400,000) form the most stable segment of the property market at present.
"At this price point, even if the decision is to lease the property investment out, post-acquisition, a purchaser should expect a 7-9 per cent gross yield in some areas and subsequently after interest payment, service charges and upkeep, there is still good profit rent to be achieved," he explained.
According to Cluttons data, studios, as well as one-, two- and three-bedroom apartments with a sales price tag under AED1.5 million, represent the most searched for segment of the Dubai property units for the moment. Thus, if you want to transform your monthly rentals into mortgage payments for your own accommodation, it currently makes good financial sense to buy apartment at these levels.
"One- and two-bedroom apartments in an established area are dominating most of the activity in the market. This is also the case for prospective owner occupiers who wish to cease paying rent. It does depend on where the individual sits financially, but if they have adequate equity, it makes sense for them to contemplate paying off their own mortgage and look at real estate as a mid and long-term investment," Paul added.
Craig Plumb, head of research at the other consultancy JLL Mena, agrees that majority of newcomers to Dubai traditionally seek to rent rather than purchase properties.
"But, as the market has become more mature, with less price volatility than in previous cycles, expatriates can be more confident to buy at close to the bottom of the current cycle to benefit from potential long-term capital growth. Recent changes to visa laws – allowing 10 year residency visa for property byers and members of their families – are also likely to increase demand to purchase property in Dubai for buyers’ own occupation," Plumb added.
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