At Magsi Group our team of professional Property Managers understand the need for landlords and property investors to generate maximum returns from their assets is increasingly important, we work with them to ensure this happens. Our service is second to none! Our many years of Property Management experience coupled with our understanding of the United Arab Emirates rules and RERA regulations place us in an excellent position to assist and manage your property when you are not able to.
The Dubai property has seen substantial growth in recent year, according to the recent estimation since 2008 global banking crises Dubai properties have increased by28%. Most analysts predict Dubai’s hosting of the Expo 2020 exhibition will help the residential market bottom over the next few year to come. Demographic trends are also favourable, with the city’s population forecast to double to 5 million by 2030. According to analysts this his will help the housing market. There will be a need for another city the size of current Dubai. This suggests that Dubai’s development story still has a long way to go. According to the Times Rich list, 40% created their wealth through property. The other 60% invested in property as a means of growing and protecting the wealth that they created in other industries. In fact, more millionaires attain their wealth through property than any other type of investment.
Buy to let property was highlighted as the best performing asset class when researchers compared its returns to other investment in Dubai. The housing market in Dubai has stabilised since 2008 crash. The rental demand is strong as you would expect from a growing global city with promising yields up to 30% on your investment.
For Example, if you invested $40,000 into the property then we could purchase a property that was worth approximately $135,000. This is achieved through using a local mortgage or other lending facility. Given the current market conditions let’s assume that the property market in Dubai also increases in value by 6% per annum (even though it increases at a higher rate in normal market conditions). After 10 years the property has increased in value from $135,000 to $216,000. Our original investment of $35,000 is now worth more than $81000.
We must consider that we will have interest to pay for borrowing this money. But this cost will be covered by tenants who will rent the property from us and there will almost certainly be a surplus income which we can spend whenever we want. Therefore our investment has significantly increased in value over time and it has given us additional income to help improve our lifestyle. The most important thing is that the property will be tenanted for as much of the time as possible. Therefore, it should be in an area of high rental demand, close to good transport links, nearby bars, shops and restaurants or close to universities and business districts.
In Dubai a typical yield we should look for is at least 16% at least, this equates to an annual rental income of $16,000 or $1333 per month. The typical deposit needed to buy this property would be 30% which equates to $30,000. This means that we would need to borrow $70,000. The interest payment on this would typically be around 7-8% per annum. This equates to $5-6,000 per annum or $500 per month. Monthly rental income ($1333), minus monthly mortgage payment ($500), equals $833.
Let’s assume monthly management cost of $100 per month. This equates to a net income of $733 per month which we can use how we like. Once we build up a portfolio of let’s say five properties, we have an extra monthly income of $3,665. This doesn’t even take into consideration the capital growth in Dubai discussed earlier. Investing in property is both useful and flexible for many reasons. Aside from the obvious financial gains, it can be used to help you achieve specific goals. For example, if you want:
It is important that you know what you are trying to achieve from investing in property. Realising this will help you plan an investment strategy and work towards achieving those financial goals.
Buying a property which does not yet exist is not an easy decision to make; however, our investors have the rewards for their bravery once property is completed.
The concept is to buy a property off plan at a discounted price based on our bulk purchasing strategy, either sell before completion or when the development is completed in 12-18 months later then we can rent & manage your property to than cover the mortgage and the out goings and the capital growth. A lot of our investors are using property as their pension plan and creating wealth for retirement, for their family’s future or for simply adding properties to your portfolio. Property in Dubai has more than doubled since expats were allowed to buy and in some areas we have seen accelerated growth. Buying from the right developer in the right area at the right time and at the right price takes full time research a great track record and careful negotiation. Our developments can take up to 2 years to build and deliver and have sometimes taken many years working through the planning process. We offer our investors an end to end solution providing pre sales consultancy, a financial, legal and efficient tax platform as well as an interior design and a block rental management service when the property completes. We don’t just stop there we can manage the sale of the property when our investors are looking to reinvest or reap the benefit of their decision.