With inflation on the rise and the value of the currency declining worldwide, many people are considering adding real estate to their investment portfolios.
It is one of the safest investments that promises sustainable returns with a guarantee of financial security. It has also recently become more attractive as a retirement investment plan globally.
Steady income, appreciation of value, inflation hedge, tax benefits, leverage, diversification, control, tangibility and equity buildup are some of the primary reasons why real estate has been sought after as a solid and reliable investment option for the past few decades.
However, those wanting to explore this market have one frequently asked question, “How much do you need to invest in property?”. How much is just enough to yield the benefits of real estate investment?
This article has gathered expert insights from realtors and financial advisors on answering this question and helping potential investors navigate the common misconceptions surrounding this market.
While it’s very common to hear people say that buying a property in the UAE takes a lot of investment, the truth is that there is no fixed or minimum requirement to explore real estate in this country of opportunities. In fact, there are no regulatory enforcements on a minimum amount to buy a property.
As of 2024, Dubai remains an attractive real estate investment destination, offering high rental yields compared to other global cities like London, New York, Paris, and Hong Kong. This stable position only means more and more people want to own a plot of land in this thriving city.
Any expat who has purchased real estate with full ownership has the right to obtain a Golden Visa. It is granted for a period of 2 to 10 years, depending on the cost of the real estate. So, if you are aiming to get a golden or residence visa through property ownership, then it comes with a minimum amount.
Anyone looking to invest in real estate and hope to get a 10-year golden visa should consider a property worth at least AED 2,000,000, or about $545,000. For this category, the investment sum does not depend on the composition of the investor’s family.
On the other hand, any investor looking to obtain a two-year property visa should buy a property worth at least AED 750,000 or $204,000 within Freehold Zones. This sum is valid only if the investor owns the property individually. If ownership is shared or registered between two spouses, then the cost goes up to at least AED 1,000,000 or around $272,000.
Depending on your salary and with the help of a reliable financial advisor, you can start small with property investment and work yourself all the way up. How much you need to buy a property in Dubai is very subjective and depends solely on your long-term financial plan, risk tolerance, and aims with the investment in general.
As with an investment, each option has its own set of pros and cons.
New property, especially off-plan properties, is a cost-effective option for real estate investing. They only require a 10-20% initial payment, and the remaining should be settled after the project is completed.
New properties also incorporate modern trends and demands, especially with space optimisation and energy efficiency. Investors have the flexibility to purchase property at different stages of construction.
One downside of this option is that the project can usually take longer to complete than expected or be abandoned altogether.
Resale properties, on the other hand, may cost you a little more than their face value for things like renovations and repairs. However, unlike new properties, investors will not have to wait long to take ownership and move in.
The secondary market is also much more tangible, as you can see what you are getting, including location, surroundings, and facilities.
However, anyone looking to invest in a property to apply for a 2-year residence visa cannot buy a property under construction. This rule doesn’t apply to the golden visa, which requires an AED 2,000,000 investment.
If you’re seeking a mortgage to buy a property in the UAE, local banks typically require a minimum monthly salary of AED 15k and the condition of meeting Dh1 million, or 50 per cent of the property’s value.
The minimum monthly salary required to obtain a mortgage can sometimes go from AED15k to AED 120k, depending on the property. This requirement ensures that you can comfortably service your loan without financial distress.
Property taxes and maintenance costs can also add up to how much you need to buy a property in the UAE. Here is a simple breakdown of this context.
Goals and location are the two primary factors that determine how much you need to buy a property in the UAE. Those looking to own real estate to claim the benefit of a golden visa or residence have a minimum amount specified. The minimum property value should be AED 2,000,000 or $545,000 for a 10-year Golden visa and AED 750,000 or $204,000 for a two-year residence visa.
If your goal is to own a piece of property for personal, commercial or rental purposes, then location stands as the key factor that affects the cost.
Narrowing down the locations should give you a rough figure on the cost of owning a property. To make things easier and to help you navigate and land the best option, it is always recommended to seek professional advice from a reputable financial advisory firm like AIX.
They have the expertise and strategies that can help you make informed decisions, optimize your investment, and ensure long-term financial stability.
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