The Dubai property market maintains a positive investment profile. High ROI is often cited as a reason for investing in the UAE.
To cut through the hype and make wise investment decisions, understanding ROI figures is essential.
In simple terms, ROI is a calculation of net profit.
Subtracting the amount paid for an asset (investment cost) from the value or resale price (investment gain) produces an ROI figure. However, calculating ROI from property involves many factors.
These include costs associated with acquiring, maintaining, tenanting and divesting. Property type and location, rental returns data, market trends, local regulations and government initiatives impact ROI. The developer and branding associated with a property also influence income projections and capital appreciation.
This complexity highlights the importance of partnering with an experienced broker.
To provide trustworthy advice, Luxury Escapes Real Estate’s brokers access current detailed market information and have a sophisticated understanding of ROI.
Location is a significant factor.
Younger professionals and families, for example, seek different attributes in a location and property. Thus, the type of property, apartment or villa, number of bedrooms and allocated parking combines with features and amenities of a location to impact investor ROI.
In an area which attracts tourists, the right property will achieve higher ROI as a short-term holiday rental. Costs associated with marketing and management to maintain high levels of occupancy must be considered in projections.
Communities away from major tourist attractions have greater appeal for long-term residents and families. Here, long-term rentals offer higher ROI. Specific earning and profit projections factor in access to community shopping centres, schools, healthcare, public transport, and proximity to key road corridors for commuting.
Capital appreciation differs if the investor purchases in an established or newer area.
In established areas, prices may have almost reached a peak or ceiling. Therefore, assuming continued favourable market conditions, over time, growth of ten to fifteen percent may be achieved.
New, upcoming, and recently launched areas under construction offer greater potential for capital appreciation and higher ROI.
Details of the master plan, reputation and track record of the developer and other factors influence ROI focussed recommendations by Luxury Escapes Real Estate brokers. For off-the-plan purchases, investor intentions at hand-over, to sell or make the property available for rent, will produce different ROI projections.
Trends like increased demand for environmental sustainability and smart technology features inform investment advice provided by a trusted broker.
Reputation and branding are another factor behind a broker’s advice and investor ROI. In a market with many high-profile and prestigious developments, specialist knowledge informs understandings of potential rental revenues and resale value.
All property transactions attract a range of fees. Reliable brokers include these in ROI calculations. Where an investor relies on financing, costs associated with capital should also be considered.
When high ROI is the goal, many factors guide advice on purchases or listing an existing property as short or long-term rental. The right partnership is essential. Luxury Escapes Real Estate’s brokers understand and can explain the many facets contributing to high returns and successful investment.
