Dubai is a globally renowned metropolitan with a fast-paced economy. It is driven by its status of one of the most significant business hubs, an attractive real estate market, and a booming tourism sector. The UAE government has also left no stone unturned to make it the preferred real estate investment choice for global investors. Dubai real estate sector boasts countless investment opportunities, supported by strong infrastructure, a peaceful and politically stable environment and implementation of buyers’ protection laws.
What makes Dubai a preferred choice for real estate investment?
Recently, the UAE government has introduced new visa policies, enabling real estate investors to get 10-years Golden Visa (against real estate investment), for long-term stay in the country. Besides offering world-class facilities and the finest amenities, Dubai properties also offer better Return on Investment (ROI) as compared to several other cities around the world. These are affordable options as compared to properties in several other international cities, and with time, premium properties in Dubai have become a top choice for foreign high-net-worth individuals.
In short, it has outpaced western cities including London, Sydney, Paris, New York, and Berlin; where every other affluent person used to invest to have a second home.
What’s next?
Investment in Dubai real estate is an open avenue for everyone in the world. It means a rich investors’ base, more funds, and higher liquidity of real estate assets. Moreover, Dubai properties serve as a hedge against inflation and offer a stable source of income in form of rental yield. With new visa offers and drastic changes to the rules of owning businesses, Dubai is becoming a place that will attract more foreign investors, who would like to stay there longer.
The UAE government has recently announced to start issuing:
Fractional property ownership title deeds
Under new regulations, “fractional” property ownership will be issued, which can tremendously increase the investor base in the Dubai real estate market.
What is fractional ownership?
Fractional property ownership allows multiple investors to acquire a property in Dubai, with each one of them having ownership rights through the title deeds.
Currently, a maximum of four investors can acquire property together in the emirate. The fractional ownership rules apply to the existing and older DLD and RERA approved real estate projects. The potential buyers can buy fractions of the property from an auction from the primary and secondary market.
Fractional ownership – A novel step for Dubai realty sector
Fractional ownership is an innovative concept for developers and buyers solely dealing in Dubai properties. Until now, the individuals had to buy a property unit in full but there could be more investors. However, only one of the investors will get the title deed under his/her name.
Add more to the existing investor base
Fractional property ownership opens new investment avenues for investors and allows developers/sellers to target a wider investor base. For instance, an AED1 million apartment will now become more accessible, if more than one investor pitches their funds together and also have individual property ownership certificates attesting to it.
Now when the market has started showing recovery signs after a dreadful period of the COVID-19 induced pandemic, it is good to see such steps that can revive the market. It is good to observe a faster pace in the market, such as in January 2022, positive growth has been recorded in terms of a number of transactions and the value.
Improved rental yields
Residential properties in Dubai are in higher demand and rents are also increasing, which means potential buyers are regaining confidence in Dubai real estate market. With more people investing in ready properties and people coming to the country, the rental market is signalling steady improvement. Improved rental yields will favour the landlords after years of experiencing lower rents and vacant properties (especially, during COVID-19 induced lockdowns).
Improved rental market situation will entice more investors to come forward, invest in ready properties, and rent them ahead. Fractional property ownership opens a new avenue for potential investors, who can now become property owners in Dubai by pitching in a certain amount and getting equal rights.
Transfer the deed’s rights
If one of the property financial investors want to exit, he can sell and transfer the deed to another buyer.
What is crowdfunding?
Crowdfunding is an option other than fragment ownership, where investor groups have rights to a property, but the title deed is issued to a special purpose company, rather than an individual.
Special Purpose Vehicle (SPV) Company is established to collect funds from investors in smaller chunks. It means a property is owned by the SPV Company and the investors will get returns based on the property’s rent or future sale. Under crowdfunding, the investors can start investing with as little as AED5,000 even.
If you are interested in buying a property through a Fractional property ownership scheme or want to know more about this new initiative, you must contact the team HFRE at +971 4876 2473 with your queries, and our experts would love to help you.
