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Return on investment on property at Beach Vista in Emaar Beachfront, Dubai

Published 13.06.2021

How does an investment in real estate in the Emaar Beachfront area pay for itself, using Beach Vista as an example - calculations, conclusions

Dubai is a modern investment paradise. Due to strong economic growth, the development of international business and tourist attractiveness, the local real estate sector has significantly expanded. In the emirate, the average return on investment is 4-8%, depending on the district. For comparison, in Paris, this figure is 3.63% and in London - 3.21%.
How do you ensure such a level of return on your investment? Let's consider the example of the Beach Vista complex in the Emaar Beachfront community.

What makes up the return on investment

Successful investment requires taking into account not only the purchase price and rental cost but also other factors. These include the right choice of the developer, the location, the surrounding infrastructure plus many more.

Developers

Your return on investment will directly depend on your choice of developer. One of the characteristics of the Dubai real estate market is that, in most cases, the construction of large projects is carried out by public developers. Private companies are usually involved in infill developments withsuch complexes rarely becoming recognizable landmark projects in the future.
By choosing a high-quality developer, you can be sure that the construction of your property will be carried out on time following the approved work plan.

In the case of Beach Vista, its developer is Emaar Properties, the largest investment company in the Middle East. It owns world-famous real estate projects such as the Burj Khalifa and Dubai Mall which are both located in the UAE. It is also widely known for the construction of the most expensive area of the emirate, Emirates Hills.

Location

Pay attention to the location of the property. When choosing a location, it is recommended to focus on several categories of potential tenants at once - business individuals, families with children and tourists. Keep in mind that on average, it takes 7-12 years to get the full return on investment. Throughout this time, your property unit should remain competitive.

Beach Vista stands a good chance of becoming a popular project. It is situated within a 20-25 minute drive from the main Dubai business districts such as Downtown Dubai, Business Bay and DIFC, where most of the international financial headquarter buildings are located. Nearby, there are kindergartens, schools, walking paths, parks and a beautiful sandy beach. The location is very convenient for individuals working in Dubai as the area is almost a city within itself. It also takes the same amount of time to reach major tourist attractions including the Dubai Frame, Jumeirah Mosque, the Burj Khalifa and Dubai Mall.

Infrastructure

Neighbourhood improvement is another important factor to consider. In Dubai, there are lots of property units and the number of new developments continues to increase every year. In such highly competitive conditions, offering quality housing is just not enough which is why Beach Vista has a wide range of facilities, including a swimming pool, gym, spa and wellness center, cafe, shops and access to a private sandy beach.

Price

The decisive criterion when choosing a property unit is its cost. In Dubai, you can take advantage of purchasing quality real estate on a relatively modest budget. Due to a large number of new projects, you can invest in a property unit that is still under construction. What are the advantages of this?

  1. At the initial stage of construction, the housing price is significantly lower.
  2. Favorable future market conditions might lead to the profitable sale of real estate.
  3. Often, developers offer discounts, promotions, and installments to their clients.
Let's consider the example of purchasing a 2-bedroom apartment in Beach Vista using the developer's installment plan.

Payment plan
0% commission
1
12%
down payment - USD 95,782
2
10%
next month after down payment - USD 79,818
3
13%
USD 103,769
4
15%
USD 119,727
5
10%
100% of construction completion and handover - USD 79,818
6
5%
4 months after handover date - USD 39,910
7
10%
8 months after handover date - USD 79,818
8
5%
12 months after handover date - USD 39,910
9
10%
16 months after handover date - USD 79,818
10
5%
20 months after handover date - USD 39,910
11
5%
24 months after handover date - USD 39,910
Real estate acquisition tax
Registration fee - 4%

Payment of the annual Dubai Real Estate Tax is not provided

Special Offer: 50% DLD compensation
Legal, notarial, translation services
Not required
Purchase of furniture
The apartment is sold with a set of furniture: 2 beds, 4 bedside tables, 2 built-in wardrobes and a dressing room, a sofa, 4 armchairs, a coffee table, a dining set, kitchen white goods, 2 fully fitted bathrooms, a laundry room, a stove, an oven, a dishwasher and central air conditioning system.
Total
USD 814,153
Nowadays, Dubai real estate is a more favourable ground for investment compared to Europe as there is no tax on property ownership and no price restrictions for foreigners as well as developers offering discounts regularly. Another advantage is the ability to take out a mortgage in any bank of the emirate. Borrowed funds can cover up to 50% of the housing price, and the total loan term can be up to 25 years at an average interest rate of 4-5%.

Return on investment

The Beach Vista residential complex is located in the Emaar Beachfront community which is part of the large Dubai Marina residential area. In this community, the average return on investments is 7% while the average purchase price of a 1-bedroom apartment reaches AED 1,400,000 (USD 381,500).

If we consider this case further, the actual payback will depend on which method of making a profit you choose - short-term or long-term rent. Let's have a look at both those options in terms of Beach Vista. Here, the cost of a 2-bedroom apartment with a total area of 1,186 sq. ft is AED 2,014,500 (USD 548,500).

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