Investing in real estate in the UAE

[olgalun]

Dubai's skyscrapers and villas will continue to attract investors' attention: the growing market allows you to earn not only on the resale of objects, but also on their improvement and repurposing. Kamil Magomedov, a broker for premium real estate in the United Arab Emirates, talks about which business models are effective in the Dubai market

The Dubai real estate market has been growing dynamically for the third year in a row. In 2022, the residential property price index increased by 98%, and sales increased by 67%. In 2023, price growth slowed down, but experts suggest that the market has not yet exhausted its potential and that real estate in Dubai will be attractive to investors on the horizon of two or three years.

In 2022, Russian companies began to look closely at the UAE real estate market, some of them have already entered into projects and started construction. In my opinion, those companies that enter an unfamiliar market in partnership with the largest local developers are doing the right thing.

So, for example, in promising locations, the master developers of which are Emaar or Nakheel, periodically there is an opportunity to buy the whole building. Thus, the investor can get at his disposal an exclusive offer on the market and exit the project closer to the completion of construction or after the delivery of the house with a yield of 20-30% per annum.

The strength of such a scheme is primarily security: the risk of losing money with such an approach is very small. In addition, it opens up the opportunity to establish strong relationships with the largest developers in the Middle East, thanks to which Russian builders get access to exclusive lots in the most popular projects. With the partner scheme, developers easily establish contacts with agencies through which apartment sales are carried out.

The downside of this approach is that the developer will earn 10-15% less than if he acted independently, but the lost profit is a security fee. In partnership with a strong local partner, a beginner will not make mistakes that can lead to loss of money.

The ratio of possible risks and profits with such a scheme is very attractive. I would also like to emphasize that Arab developers, as a rule, do not burden foreign partners with intrusive attention and do not try to control all aspects of the business.

Developers who carefully assess the risks understand the attractiveness of such a model and are looking for opportunities to enter the most interesting projects: in some cases they buy the whole building, in others — several floors. In both cases, they count on discounts, which, when selling apartments at retail, make such investments even more profitable.