Investing in Dubai’s Property Market: A Success Story
Dubai’s Robust Real Estate Performance
Krzysztof Lewandowski, a 37-year-old Polish national, has become an enthusiastic advocate for the Dubai property market. Recently, he bought an apartment in the Emaar Beachfront project for Dh4.2 million ($1.14 million). His belief in the market’s potential is driven by his positive experiences with other properties in his portfolio, which have seen attractive returns and significant capital appreciation.
A Growing Portfolio
Lewandowski’s real estate journey in Dubai began seven years ago with his first purchase in Emaar Beachfront. Since then, he has acquired apartments in Dubai Creek Harbour and Jumeirah Lakes Towers, all of which are currently rented out. Additionally, he has invested in an off-plan villa worth Dh4.2 million in Sharjah’s Masaar community by developer Arada.
Why Dubai Over Warsaw?
Lewandowski explains that for $1 million in Warsaw, one could only afford a 20-year-old apartment in the city center, which would require renovation and offer minimal price appreciation of around 3.3% to 3.5%. This prompted him to sell two apartments in Warsaw and invest in Dubai instead. He highlights several advantages of Dubai, including safety, attractive payment plans, and significant capital appreciation.
The Strength of Dubai's Property Market
Dubai’s property market has been thriving, supported by government initiatives, economic expansion, and higher oil prices. In the past year, the emirate registered a 17% increase in real estate transactions, totaling 1.6 million across various market segments. The value of real estate deals reached Dh634 billion, marking a 20% annual growth.
Comparing with Europe
Lewandowski notes that properties of comparable specifications and quality are not available in Europe for $1 million. He points out that similar units with private beach access in Spain or France would cost between €5 million ($5.4 million) and €15 million. In Europe, developers typically neglect ongoing maintenance and amenities, unlike in Dubai where master communities are meticulously planned.
Investment Returns
Lewandowski’s investment in an apartment for Dh1.6 million is now valued at Dh4 million. He emphasizes that new properties can yield returns above 7%, while older units can offer up to 15% return on investment. The high appreciation rates make it more lucrative to rent out properties and live in hotels with the proceeds.
Financial Insights for Potential Buyers
Affording a $1 Million Property-
An applicant with a monthly salary of Dh50,000 can consider buying property close to $1 million, requiring a 20% down payment and 80% bank finance. The eligibility for loans depends on various criteria including profession, income, residential status, age, and existing financial obligations.
Down Payment and Loan Details
For a $1 million property, a down payment of 20% to 25% is common, equating to $200,000 or Dh734,500. Monthly loan instalments for a 25-year tenure range between Dh14,500 and Dh15,333, depending on the down payment percentage. Couples can combine their salaries to enhance eligibility for property ownership within this price range.
Additional Costs
Buyers must account for additional fees such as the 4% Dubai Land Department fee, 2% broker fee, and other ancillary charges like mortgage registration and moving costs. Off-plan purchases often require a 10% or 20% down payment with flexible payment plans across development stages.
Property Options for $1 Million in Dubai
Residential Choices –
With a budget of $1 million, buyers have various options across Dubai:
Popular Locations
For those preferring city center locations like Downtown Dubai, Dubai Marina, Business Bay, and Jumeirah Beach Residence, options include studios, one-bed, or two-bed apartments. Suburban areas like JVC, Damac Hills, Motor City, and Sports City offer a range of studios to four-bedroom apartments and townhouses.
Off-Plan Advantages
Off-plan units in Dubai typically feature flexible payment plans that spread costs over the development period, easing financial pressure on buyers. These properties are generally priced lower than completed units, offering better initial value and potential for significant capital appreciation upon completion. Buyers can benefit from phased payments, which align with construction milestones, reducing the need for large upfront investments. Additionally, purchasing off-plan often allows buyers to secure prime locations and customized finishes at pre-market prices. This combination of affordability, payment flexibility, and future value makes off-plan properties a compelling choice for investors and end-users alike.
Market Evolution and Current Trends
Market Evolution and Current Trends –
Before the recent property boom, $1 million could secure larger properties in Dubai. The price per square foot has since surged, limiting the budget to smaller units or less central locations. Despite this, Dubai remains more affordable compared to global cities like London, New York, and Paris.
Buyer Demographics
High-Net-Worth Individuals and Investors-
The $1 million property market in Dubai attracts high-net-worth buyers, expatriates, business owners, and foreign investors. These buyers seek luxury amenities, proximity to key locations, and potential for rental income or appreciation.
Preferences by Region –
– Indians and South Asians: Prefer townhouses and villas, focusing on space and practicality.
– Europeans: Favor beachfront or branded residences, less sensitive to price, and more concerned with location and quality.
– Russians: Opt for lagoon-facing properties with scenic views.