Armed with knowledge: A smarter approach to real estate investment

Investing in property has always been considered to be a relatively sound investment worldwide. In the UAE, the option is even more attractive as new developments and incentives are being introduced every day in the UAE that boost the value proposition of real estate here.

The UAE property sector is increasingly becoming one of the most diverse and market-friendly in the world. Now, is a great time to invest in property here, but it’s important that buyers approach the issue armed with all the relevant knowledge to make the best choice suited to their needs.

Select smart

Do your research and study several residential properties based on what matters the most to you. Real estate goals come in all sorts of shapes and sizes, so don’t let anyone tell you yours are too big or small.

You could be buying for your own use, or for the long-term goal to earn revenue. Based on what you want, find out which areas are performing well and take that into account when deciding where to invest.

The UAE offers a plethora of options for you to choose from – high-rises in Dubai Marina, JLT and Business Bay, community living in Arabian Ranches, DAMAC Hills, to luxury living and offices in Business Bay and Palm Jumeirah. Pick those properties which are ripe for investment. Diversifying your portfolio can also make it less susceptible to market fluctuations.

Get finances in order

A larger down payment can speed up your investment process. It is recommended that at least 20 percent of your purchase price is paid in advance to avail the property and make you eligible to buy it immediately. If you borrow less money, you will obviously have less to pay back. This leaves you more cash for other things, or potentially enables you to take out a shorter-term mortgage with a lower interest rate.

Real estate developers can also offer financing services, which can bring down interest rates or give you more years to pay off the cost. DAMAC has its own financing service called DAMAC Mortgage Assist, which ensures maximum comfort and ease for the customers, who not only get the best financing deal, but also get it for a property that scores high on every facet of luxury.

Renovate

Renovating a space is an interesting experience for creative real estate investors. When done correctly, you will be able to renovate the space into a smarter and more modern design, boosting the value of the property over time. There are ample reports suggesting that upgrading your property can bring up the price per square foot by as much as 33 percent.

Renovations can be done by hiring an interior designer or having your own design skills embedded into the space. This flows into the price of the property as well, increasing the sale price and generating a higher profit.

Invest to reside

The classic approach to invest in a property is to purchase and reside in it. This not only saves you from extra unnecessary costs, but also means a long-term investment. For example, you are paying your own mortgage instead of a landlord’s, flowing your money back into your property and growing your net worth. A point to keep in mind though is saving up for a down payment and using that to pay out a mortgage.

Rent your property

Investing in a property and renting it out immediately guarantees generating a stable monthly income which can be used to pay off a mortgage. While a careful buy-to-rent plan promises a reliable revenue inflow in the long term, it can be quite risky if it is your only real estate investment.

While events such as the market crash and Covid-19 do occur, rental property owners who invest for long-term returns are not affected. One of the distinguishing characteristics of the real estate industry is the never-ending boom-and-bust cycle. Once an investor understands how to recognise this cycle, the traditional adage of “buy low, sell high” becomes much simpler to achieve.

Stay educated

Real estate investment, while not rocket science, needs careful planning. As with any business, it is imperative to stay up to date with the laws, regulations, terminology, and trends that form the basis of the real estate investor’s business.

Investors who fall behind risk not only losing momentum in their businesses, but also legal consequences if rules are ignored or broken. Successful real estate investors stay educated and adapt to any regulatory changes or economic developments. Moreover, keep up to speed on real estate, tax, and lending laws and regulations that could directly or indirectly impact your business.

The time is now

The favourable buyer’s market has sparked a surge in real estate transactions in Q1 which is expected to continue for the rest of year. Transactions and sales continue to break records. The emirate recorded 25,972 transactions in the first quarter of 2022, marking it the highest number of deals since 2010 in a single quarter and the highest volume since the first quarter of 2014, according to DLD.

As the UAE government continues to launch incentives that make the country an attractive destination for working, residing and growing business, the UAE real estate will become even more sought after. Therefore, the time is now to make your home ownership dreams a reality.

Niall McLoughlin, Senior Vice President at DAMAC Properties.