The Dubai Land Department reported a total of 2,338 real estate transactions worth AED 7.3 billion during the week ending 14th October, 2022. 

While the statistics paint the perfect picture of success when it comes to investing in Dubai, you may want to hold on and consider these 5 rookie mistakes you’re making with your Dubai real estate investment.

1. Not researching

Lack of research is the most common mistake new investors make. Rushing through the process may seem convenient in the height of the excitement you feel but it’s critical that you ask yourself these questions before your final decision. 

• Who is the developer, what is their background and how are their past projects?

• For residential investments: What’s the cost of living, maintenance and services charges, do they match with your budget?

• Does the area have basic amenities? How is the connectivity overall?

2.  Not knowing about deposits and payment terms.

Make sure you are aware of and understand the differences between buying an existing property and an off-plan property. 

When it comes to purchasing an existing property, the payment is transferred to the real estate broker. 

The buyer is required to write a check of 10% of the amount as the booking deposit and provide it to the broker. The seller is also given a 10% security deposit by the company hired by the buyer. 

For off-plan properties, the money is transferred to the developer’s account. However, keep in mind to never send the money directly to the developer’s account. 

Usually the buyer is required to deposit the money into an Escrow i.e. a neutral third party account which is attached to the particular project. 

This ensures that the money is safe and cannot be retrieved until a certain level of development is complete.

3. Not calculating the total cost 

Before you consider a new investment, it's vital to assess your existing financial condition. 

Compute the actual cost of the investment you’re considering and match it with your budget. 

Real Estate Investment entails additional costs in the form of the price of the property, taxes, and registration charges. 

If you’re buying an existing commercial property or plan on living in the residential development, you may also want to consider the costs of renovation and maintenance. 

Create a list of all the expenses involved and be prudent in your investment decision. 

Also factor in the sources of funding for your investment. In case you plan on taking a home loan, make sure to verify with the bank if you are eligible or not prior to making any commitments. 

4. Not knowing the different real estate investments

We talked about the importance of doing research before the investment. Another valuable point is to analyze the types of investments in the market to find the best one for you.

You can choose to invest in real estate either by:

• Purchasing income-producing property i.e. commercial developments that require no or minor renovation or 

• Purchasing income-producing development that requires renovation or

• Purchasing residential properties or

• Crowdfunding real estate properties.

While the commercial units are lucrative to investors, keep in mind that when external factors are at play, such as the four elements that majorly influence the real estate market: demography, interest rates, the economy, and government regulations or subsidies, they are also the ones that receive the hardest hit and require a lot of time to recover. 

Commercial properties also tend to have higher maintenance charges and comparatively lower returns on investment. 

Also understand the difference between the two types of homeownership in Dubai: Freehold and leasehold. 

Freehold properties are available only in designated areas and can only be bought from government approved real estate developers or agents.

5. Not listening to professionals

Real estate investment is a lengthy intensive process that requires in-depth research and consistent market analysis. Even experienced investors are prone to making mistakes when it comes to real estate. 

The dynamic market conditions can be especially hard to navigate through. The advice of a professional is a key to ensure that you make the right and safe decision when it comes to investing in Dubai. 

Having a trustworthy and registered real estate agent on your side protects you from frauds, empowers you to take your case to the RERA in case of any mishap and conduct the investment process in a safe and effective manner. 

An experienced real estate agent will be able to help you find the perfect property that matches with your budget criteria and can serve as an advantageous long-term investment for you.

Dubai’s real estate market recorded the highest number of sales this year with over $27.2 million, reports Emirates News Agency. Looking forward to being a part of this rapidly developing metropolis? Connect with Revo’s expert real estate agents today and gain insight into the right real estate investment projects in Dubai for you. To book an appointment, call us at +971 48 183 183 or email us on connect@revorealty.ae