Why should you invest in real estate?

Georges El Hachem - July 7, 2021

The primary reason people invest their money is to grow their personal wealth. As such, investing your earnings is the only way in which you can significantly enhance said wealth. The notion that simply leaving your earnings in the bank, while waiting for those savings to grow, is no longer a palatable option for many. Given the miniscule returns afforded by banks via investment rates, and as economic inflation grows at quicker rates than earned interest, your money essentially becomes devalued by sitting idly in a bank account.

As a result, people are becoming more aware of the necessity to find a way in which to grow their earnings through other avenues. This had led to a drastic increase in consumers looking towards gold, the bond market, the stock market, and in the highly volatile world of cryptocurrency in recent years. All the while, the most stable means of investing remains real estate. Dubai has experienced a boom in real estate transactions in the first half of 2021, and there are many reasons why savvy investors are queuing up to get their hands on property in the city.

Given the government’s innovative directives of the past, and the impressive plans for the future, including the Dubai Urban Master Plan 2040, Dubai is showing no signs of slowing down in its ambition to the world’s premier destination for residents and tourists alike. This is drastically increasing the demand for top tier accommodation in key areas across the city. The year-round attractions on offer in Dubai, and the high occupancy rates in the key locations means there is a constant stream of demand for quality residences.

Why is real estate investment secure?

As opposed to the more volatile stock or crypto currency markets, real estate offers a much safer floor for investors over the long run. It not only does it allow you to earn a passive income in the form of rental agreements, be they short term or long term, but you also have the opportunity to recoup the full value of a property through any future resale. Unlike other and more unpredictable investment opportunities where your entire portfolio is tied to daily fluctuations in market price, you cannot lose the money you have already earned through rent. Also, at times when real estate values drop, you can safely hold onto your asset knowing that no holding costs will be incurred as you wait for the inevitable market rebound.

Easy financing options

A second major benefit of purchasing a property comes through knowing that you do not need the full unit amount to hand right away in order to proceed with your purchase. In order to secure your property, initial down payments can start from as little as 5% of the overall cost of the unit. This makes it very manageable when it comes to your initial outlay. Furthermore, in many cases there will be numerous options on the table via favorable payment plans and having costs spread out over future years. This also reduces the financial burden up front, while giving you the opportunity to raise capital and reduce the necessity for high value mortgages.

Generous Rental Returns

Another appealing benefit of real estate investment particularly when owning a property in Dubai, is you are not liable to pay income tax on any earnings associated with your rental property. While VAT was introduced in 2018, this does not extend to rental income. Rental yields in Dubai also stack up very favorably with some of the other major cities across the world, offering a return on investment in the region of 5% per unit, and potentially up to 8% depending on what part of the city the unit is located – whereas similar cities such as London, Moscow, Paris, New York offer around the 3% mark annually.

Tangible Benefits of Owning a Property

Unlike some other popular investment options mentioned earlier, a major positive that associated with investing in Dubai real estate comes through the fact you can reap the physical rewards of owning a property in one of the world’s most popular destinations. While in lot of situations, foreign property investors in Dubai may never step foot in the unit once they complete the transaction, they know they have the option to should the need ever arise. Given the amount of exhilarating world-famous events and occasions that take place in Dubai, and the UAE on an annual basis, owning a property in the heart of the action presents the opportunity to utilize this residence for yourself, if and when required.

The Author

Georges El Hachem - Director, Commercial

Georges joined Select Group as Commercial Director in 2020. He has over 18 years’ experience in destination management and expert knowledge across an array of industries including hospitality, tourism and MICE. He has a deep understanding of the GCC, and the buying behavior of the international visitors to the region.