Dubai real estate is booming, with a reported AED191bn ($52.5bn) of residential property sales in the first half of the year alone.
Barely a day goes by without news of a $20m home being sold on Palm Jumeirah or luxury homes with Burj Khalifa views being sold for record sums.
Records for the volumes and value of Dubai real estate continue to fall and real estate brokers broadcasting their contacts and contracts with super-rich investors from around the world. A $10m home here. A $25m property there.
Affordable Dubai real estate investors
But real estate investment in Dubai is not restricted to ultra-high net worth clients being ferried around luxury developments in limousines and snapping up the most expensive homes.
As well as homeowners buying entry-level properties to get on the investment ladder, there are numerous ways to buy real estate in Dubai without having to have millions in the bank.
From fractional ownership, low-deposit mortgages and real estate investment trusts check out these alternative Dubai real estate investment models.
Buy in to Dubai property from as little as $136
This step aims to expand property accessibility and ownership opportunities for everyone while also increasing community awareness about the importance of collective investment in the sector.
As a local company launched in Dubai and expanding globally, Stake provides a fully comprehensive digital experience. This contributes to digitising buying and selling procedures, thereby leading the global digital transformation process and democratising real estate, making such investment accessible to everyone.
Established in 2021 during the COVID-19 pandemic, the Stake platform aims to bring about change that aligns with that period by offering the best real estate opportunities with the highest investment potential.
Through the use of the app, anyone can create a global real estate portfolio within minutes and start generating lifelong income to achieve their ambitious goals.
The platform enables investment in real estate with a minimum stake of only AED 500 ($136), while managing all investor transactions from investment to exit, distributing monthly rental income and capital appreciation returns directly into the investor’s Stake investment wallet.
Shared ownership of luxury properties from $54,000
Shard is set to transform the UAE’s premium real estate landscape with its innovative co-ownership model, proven worldwide, making premium properties more accessible than ever.
Previously available only to a selected network, Shard’s service launched to the public on July 1. Shard offers 1/8 ownership with your name on the title deed and seamless property management at a fraction of the cost.
Shard caters to those seeking a luxurious lifestyle, providing access to world-class amenities in some of Dubai’s most coveted locations.
With exclusive use of the property for 44 days a year, owners can enjoy premium residences in locations such as Downtown, Bluewaters Island, and Palm Jumeirah.
The co-ownership model allows for a flexible and upscale living experience, ideal for personal retreats, family vacations, or hosting friends.
The co-ownership model, already popular in the US, Europe, and Southeast Asia, is expected to rapidly gain traction in the UAE due to the booming real estate market.
It alleviates the burdens of sole ownership, such as large financial outlays, complex paperwork, and property maintenance.
Through its website and mobile app, Shard enables up to eight owners per property, ensuring lower entry costs to true ownership and end-to-end management by Shard.
A dedicated Shard team facilitates a fully transparent purchase process, as well as the scheduling of stays.
Shard properties are tailored for co-ownership, offering flexibility and a luxurious lifestyle. Payment options include bank transfer, cheque, credit card, and, later on, crypto coins.
The Shard App provides convenience and transparency, allowing users to schedule stays, rent their days out, and sell shares with just a click.
Co-ownership is a growing trend globally, enabling many to realise their dreams of owning premium second homes.
Low deposit mortgages and financing deals for Dubai real estate
Dubai real estate investors are turning to bank financing options to purchase properties with less burden on down payments to buy in off-plan developments.
This move aims to facilitate the purchase of off-plan properties by offering more flexible payment plans, thereby making it easier for potential homeowners and investors to secure their desired properties.
Traditionally, off-plan projects required buyers to make substantial upfront payments directly to developers. For instance, a typical payment structure might demand a 60 per cent payment during the construction phase and the remaining 40 per cent upon handover.
However, under the more widely implemented financing schemes, buyers in Dubai can now pay the first 50 per cent, with the banks covering an additional 10 per cent during the construction period and the remaining 40 per cent upon handover.
This development addresses a key concern for many buyers who struggle to manage the hefty initial outlays required for off-plan purchases.
The expanded implementation of these financing options not only reduces the financial burden during the construction phase but also provides a more balanced and manageable payment schedule.
Example of the Expanded Payment Plan:
Initial Payment: 10 per cent of the property value at the time of booking, plus a 4 per cent Dubai Land Department (DLD) fee.
Construction Phase Payments: The remaining 50 per cent will be paid over the next 15 months in equal quarterly instalments of 10 per cent.
Bank Contribution: Once the buyer has paid 50 per cent, the bank will finance an additional 10 per cent during the construction phase.
Handover Payment: At handover, the bank will cover the final 40 per cent
For example, if a project is set to handover in Q2 of 2028, the payment breakdown will be as follows:
- Q4 2024: 10 per cent
- Q1 2025: 10 per cent
- Q2 2025: 10 per cent
- Q3 2025: 10 per cent
- Q4 2025: 10 per cent
- Bank Payment During Construction: 10 per cent
- Bank Payment at Handover: 40 per cent
This means that by the time of handover, the bank will have financed 50 per cent of the property value, with the buyer covering the other 50 per cent.
The Dubai real estate buyer will then repay the bank over an extended period, typically up to 25 years, making the financial commitment more manageable.
Rent-to-own property in Dubai
Artaches Grigorian, Broker at Whitewill Dubai believes that the RTO market is “experiencing significant growth” driven by rental costs and the rising desire among tenants to become homeowners, “without the need for a large downpayment.”
“This market offers a viable entry into property ownership and stable income for landlords,” he said.
In recent years, interest in rent-to-own properties has evolved.
“The demand for rent-to-own properties in Dubai has surged in recent years as it is an attractive option for both renters and buyers. In the first three months of 2024, there has been an increase in leases converting into sale and purchase agreements,” said Grigorian, highlighting key trends which include, economic factors, market adoption, rising rental prices and more.
Key RTO trends
- Rising rental prices: Increasing rental costs in areas like Downtown Dubai and Dubai Marina have made traditional renting less appealing. Many tenants now prefer rent-to-own to stabilise housing expenses and work towards ownership
- Economic factors: Economic uncertainty and the high upfront costs of traditional home purchases make rent-to-own schemes attractive. These schemes allow tenants to avoid large down payments and build equity over time
- Regulatory support: Adjustments by the Real Estate Regulatory Authority (RERA) have encouraged rent-to-own agreements, helping tenants manage housing expenses and providing landlords with secure investment options
- Market adoption: The concept has gained momentum in upscale and mid-range neighbourhoods. Developers and landlords offer these schemes to attract long-term tenants and ensure a steady income stream
Ren-to-own buyer benefits include:
- Lower initial financial commitment: RTO allows buyers to move into a property without the hefty upfront payments required by traditional purchases
- Equity accumulation: During the rental period, buyers can build equity that contributes towards the purchase price
- Assessment period: Tenants have the opportunity to evaluate the property and their financial situation before committing to a full purchase
- Accessibility: For those unable to secure traditional financing at present, RTO provides a more accessible route to homeownership
Grigorian said: “The steady increase in property prices makes it difficult for potential buyers to afford large down payments, thus driving interest in rent-to-own schemes, which spread the cost over time. Additionally, escalating rental costs make the predictable expenses of rent-to-own agreements more appealing.
“This market offers a viable entry into property ownership and stable income for landlords”.
Real Estate Investment Trusts in Dubai
This comes almost 8 years since the UAE government implemented legal and regulatory frameworks to permit investments in REITs.
Dubai’s property market has long attracted investors from across the GCC and beyond, with high-profile new developments and extensive government initiatives aiming to transform the emirate into a global business and tourism hub.
However, in an environment of rising interest rates and moderating housing price growth, real estate investors are exploring creative ways to maintain healthy returns. This is leading many to consider real estate investment trusts (REITs).
REITs are companies that own and manage income-producing property assets. They allow investors to gain exposure to real estate without directly owning physical property.
Like regular stocks, they trade on major stock exchanges, hence providing daily liquidity. They also distribute most of their income as shareholder dividends.
For Dubai real estate investors accustomed to infrequent transaction opportunities and illiquidity in physical properties, REITs offer a refreshing change.
They can build diversified portfolios with as little as the cost of a single share, and enter or exit positions seamlessly during exchange trading hours.
REITs are often managed by professionals who handle operations such as tenant relations and maintenance which essentially free investors from those responsibilities.
While residential REITs are also viable, their many tenants increase management costs and vacancy risk from potential residential fluctuations which require more hands-on oversight.
In this market, however, both commercial and residential REITs can be attractive options depending on risk tolerance.
Follow us on
