Property investing can be a critical, life-changing decision for anyone. I personally can’t imagine myself going through all that hassle on my own. For this reason, it’s absolutely normal, and necessary, for most people to research as much as they can, as well as seek guidance from experienced investors before investing for the first time.
However, not all the information you come across is actually legit. There are many misconceptions people hold about the real estate sector, which could, unfortunately, leave you with false perceptions. Besides, exaggerations and rumors are bound to happen, especially when it comes to booming real estate sectors like Dubai’s!
In a world that blurs the line between fact and fiction, separating yourself from such inaccurate and fictional stories can be challenging. So, to help you filter out the noise and make the right decisions, I will debunk 5 Dubai property investing myths:
Myth 1: You need a high amount of capital upfront to invest in Dubai’s real estate
Perhaps this is the biggest misconception people have about property investing in general, let alone Dubai property investing. Luckily, nowadays, real estate is no longer reserved for the rich. With reputable real estate crowdfunding platforms in MENA such as smartcrowd.ae, people have direct access to real estate by owning property shares in Dubai’s best properties starting from just AED 500. Meaning, there is no need to acquire high capital upfront to invest in any property. No more excuses.
You could either opt for fractional property investments in Dubai or invest entirely on your own. If you prefer the latter, you can simply apply for a home loan to help you finance it. Most banks in the UAE offer various favorable payment plans, depending on your financial capabilities – Which brings us to another myth I shall discuss below.
Myth 2: Taking a loan can increase your returns exponentially
Don’t get me wrong. I’m not dissuading you from taking a mortgage. In fact, I come from this school of thought that favors taking a mortgage instead of paying cash upfront. For example, a lot of people take advantage of banks offering loans at low rates and rent out their apartments to cover up the costs of the mortgage. Sometimes the rent even leaves you with extra income after paying your monthly fee which increases your returns. However, one must keep in mind that risk and return are directly proportional when it comes to financing your home. There is a risk of your house remaining vacant or rent prices dropping. On the other hand, you could also potentially earn higher in case rents were high. Either way, you should be ready to handle any risk associated with taking out a mortgage, especially when it comes to Dubai’s property market. To learn more about mortgaging your property, you can watch our webinar.
Myth 3: Prime properties are better investment options
One of the biggest mistakes people tend to make is looking only into central business districts and prime areas. I’ve heard it multiple times from clients: “We need more of The Palm properties or Downtown Dubai or an apartment in the Burj Khalifa”. My answer is always as follows: this isn’t your dream house hunt; it is solely an investment journey. In order to succeed in that, you should leave out your emotions from the mix. You need to keep in mind that you’re not living in that house. When investing in a property, you should consider a wide range of key aspects – net yields being one of the major ones. Regardless, prime properties or so-called luxury properties don’t perform as well as properties in areas like JVC, Dubai Marina, JLT, or Dubai South. For example, people usually seek to rent in JVC for its affordability. So, properties as such provide higher returns for you and serve as better investment opportunities in the Dubai property market.
Myth 4: Dubai’s property market is oversaturated
Despite going through turbulent times in the previous years, Dubai’s real estate market is classified as an undervalued market, according to UBS Global Real Estate Bubble Index. Thanks to the new government initiatives, visa amendments, expo 2020 underway, and a successful vaccination drive, more foreign investors are flocking to settle in the region. As a result, the rise in real estate transactions is expected to remain for a prolonged period. In fact, there is currently a limited supply, especially for studios which is the most demanded investment option, especially on our platform. Overall, Dubai’s property market is growing with more developments on the way. Regardless, one cannot generalize, in case there was an actual oversaturation happening, for every community performs differently. Some areas generate higher net yields and are more demanded while others don’t reflect similar results.
Myth 5: You must perfectly time the market
I’ve said it before and I’ll say it again: you cannot possibly time the market, even the biggest real estate tycoons cannot do so perfectly. In fact, timing the market is quite tricky and involves a wide range of factors that are complicated for the regular individual to track. A simple piece of advice is to follow a strategic plan that suits your goals and try investing as early as you can. This is how most successful investors make it. Just start with small amounts, regardless of how trivial you might think it is. With time, and as you re-invest those small earnings, you will eventually end up with a significant amount thanks to compounding.
Investing in real estate is undoubtedly a challenging commitment and to jump on the right track, you should disregard the noise. Now that we have debunked Dubai’s property investing myths, just focus on your ultimate goal and figure out an adequate plan to achieve it. As long as you are regularly keeping track of the latest market updates and basing your decisions on accurate historical market data reports, you will more likely succeed in fulfilling your targets in the Dubai property market.