According to some research sources, prices are leaning towards decade-long lows and there appears to be a lot to be done. So, is 2021 a good time to invest in Dubai’s real estate? If you are planning to buy a villa in Dubai for your family, go through some villas for sale in Dubai.
While Dubai’s residential sector is still facing a range of difficulties – a historic supply surplus and now more recently due to the Covid-19 pandemic softening in demand levels – there are several persuasive factors underpinning reasonably high functions of the business.
The points, listed below, have and will continue to help both investor and owner-occupier activities. Let’s take a look at them.
Prices are decreasing
To many market analysts, it would come as no surprise that average residential prices in Dubai are not too far from the record lows of the last decade. It is important to note, though, that Dubai has a range of micro-markets, so the headline figures do not necessarily tell the whole story, which is that we are witnessing the initial phases of a turnaround.
However, some luxurious areas such as Palm Jumeirah, Jumeirah Bay, and District One witnessed their respective average square foot price rise by up to 6 per cent in the first eight months of 2020 relative to the same period the year before. The rates are definitely still important in secondary areas and areas with an influx of supply.
Freehold vs Leasehold
People who are not very familiar with the UAE and particularly the Dubai real estate market sometimes get confused about the distinction between freehold and leasehold areas. Good decisions regarding the purchase of a property in Dubai enable one to consider the fundamental difference between the distributions of these areas.
- a) Freehold Areas in Dubai
At a time when a foreign national could not purchase property in Dubai, but things improved from the year 2000 and the Dubai government implemented new rules to make it easier for expats to buy property in Dubai. Certain areas are freehold land, which basically means that it is possible to purchase property in those areas for anyone from anywhere in the country.
- b) Leasehold Areas in Dubai
As the name also indicates, leasehold areas are the areas in Dubai where you can not purchase real estate, but a piece of land/property can be rented. By definition, any property granted in a lease is called a leased property for a term of more than 10 years up to 99 years.
Loan-to-Value (LTV) Ratios
As part of the economic stimulus program of the UAE Central Bank, LTV ratios have been raised by five per cent for all property transactions, including off-plan property mortgages, for first-time buyers. Historically, high LTV ratios have been cited as among the most effective owner-occupation hurdles, especially among foreigners, this relaxing of rules is expected to allow many to swap tenures.
Purpose of Buying a Property in Dubai
A person in Dubai buys a property for the following purposes:
- a) Buying Property in Dubai for Personal Use
Dubai has been the industry focal point and the second home of a large number of people from all over the globe. Properties in Dubai for general expats who are factory employees have constantly been viewed as expensive and far. In every case, circumstances have improved now, and as opposed to leasing one, various people who work in Dubai are now curving towards owning their own house.
In the off possibility that your intention to buy property in Dubai is to live by it and by then, you will need to think of the schools, emergency clinics, general shops and restaurants and so on that are in or around the house. This factor should be considered if you are going to bring your family to stay up with you.
- b) Buying Property in Dubai for Investment
Benefits such as free prices, easy and simple structures, high rent rates, high speculative capitalization, etc. are recognized by the investors to invest in real estate in Dubai. A larger proportion of people in Dubai ought to buy those assets that can give them extraordinary investment returns.
The following things must be considered if you are planning to buy property in Dubai. You can hire the services of real estate companies in Dubai to get a better understanding of how these things work.