For example, investing in either commercial and residential properties or both can give a balanced portfolio that reduces the risk associated with market conditions of any one segment.
Investors should also look out for other areas with strong growth prospects. Although traditional areas such as Downtown Dubai and the newer hub of high-rise real estate, Dubai Marina, will remain strong performers with a loyal following from investors worldwide, new off-plan launches including those in abundant supply near Maktoum International Airport at Dubai South and Al Furjan show promise too. While appealing for long-term investment, these regions either already governed infrastructure projects or government-driven initiatives.
Another important factor is the ability to recognize, at any given point of time or year when there are market trends and invest prudently. Investors can track supply and demand scenarios, rental yields as well events about new projects which will help them in getting hands-on the properties best suit their needs.
Keeping abreast of market conditions ensures that investors can take sound decisions at the right time to capitalize on their returns.
One can also use financing options to make improvements, which helps create a higher investment potential. Dubai has various mortgage products that cater to different investor requirements. Leverage, when used appropriately, can turbocharge investment returns in an environment with robust capital appreciation potential. But investors should tread carefully, ensuring their financing strategies match the broader investment landscape and can accommodate different levels of risk.
Concerns Pitfalls
Although the Dubai real estate market provides numerous benefits, potential investors should also be mindful of the risks involved. For instance, the potential risk of market volatility is driven by wider external forces including global economic conditions and geopolitical tension. Investors need to keep up with the latest developments and adapt their strategies.
The presence of oversupply in some market segments should also be accounted for. Even though the top levels of demand are prevalent across your potential investment area, having too much to offer can lead in price fluctuations and put pressure on rental yields. LPs should perform careful market research and consult with specialists to take well-informed decisions and reduce risks.
Also, the returns on investment can be adversely affected by currency fluctuations particularly for foreign investors. The UAE dirham is pegged to the US dollar which means any fluctuation of currency exchange rates on a large scale can alter return prospects over real estate investments.
In this context, investors can make their investments in a hedge to protect themselves from any currency fluctuation.
The role of property management should not be overlooked by investors. And this is important because if not managed well, you are cutting down your rental income and the value of the property. Most investors also prefer to use professional real estate buying services to handle logistical issues such as tenant relations, maintenance, etc. Its making the process as smooth and clean as possible - a stress-free investment!
