Dia Soleado Invest Blog

This is a very popular misconception and judging by the sheer amount of interest that we have been generating as of late I think it is more than safe to answer this question with a resounding NO.

Yes, there has been a lot of building, but demand is huge. The main driving factor behind this is the fact that Dubai represents one of the fastest growing populations in the world. The current population of 1.3 million is predicted to rise to 4.5 million by 2010. This predicted growth means that approximately 50,000 new residential units are required annually to meet demand.

Combined with the anticipated doubling of the population in the next 4 years; relocation of global company headquarters; increased tourism, and a general booming market – is all adding to Dubai’s attraction.

The Dubai Government is working hard to prevent a shortage of supply and is giving land to developers as an incentive. What looks like massive supply today in Dubai may be nothing compared with demand in a few years time. Dubai is after all growing its GDP by 7-8% a year and shows no sign of slowing down.

Properties are appreciating steadily at the rate of 15% – 20% per annum, (for some developments even greater). It is estimated that by 2009, based on current growth, your initial financial investment is expected to at least double. Add to that, the fact that any long-term resident will pay out a fortune in rent.

This demand is not about to let up.

The buy-to-let property investment model allows you to enjoy a rental income over and above the capital gains on your property. With a carefully thought out strategy, you could make enough in rental fees to cover your mortgage payments and running costs on the property and maybe even have something left over.

Of course, not all properties are suitable for this kind of investment and you will have to take several factors into account in order to identify the buy-to-let property investments with the greatest potential.

Get to know the local letting market
Will you be long-letting your property, or targeting tourists looking for completely different characteristics? Is it best to aim for the high or low end of the market? Will several small apartments give you a higher rental income than fewer large ones, or even a house of equivalent value?

The best type of property to invest in will depend on the demands of the letting market in the area where you are buying. For this reason, it is fundamental to rely on expert advice when deciding upon the best buy-to-let property investment strategy.

Buy for your potential tenants – not for yourself
Remember that you are investing, and not buying for pleasure. If you let your own personal tastes and preferences get in the way, you could easily end up with a property that is difficult to let or that gives you a return on your investment that is way below what it could be.

Which locations and types of property are most in demand? What standard of finishing would your tenants expect? What amenities (beach, shops, bars, schools, public transport, etc.) are important for them? These are some of the things you will have to consider when you invest in buy-to-let property.

Factor in the running costs
Apart from possible mortgage payments, you will also have to take into account the costs of owning, maintaining and letting your property. These costs will include possible council tax, periodic redecorating and wear and tear expenses, extra building insurance (if your policy does not cover letting), cleaning services and advertising or letting agent’s fees. Estimate what the expenses will be as accurately as possible beforehand, to make sure your buy-to-let property investment is viable.

Study the local tourist sector
If you intend to rent to tourists, you should acquire your buy to let property investment in an area that receives a high demand for as much of the year as possible. Also take into account the periods when your property is expected to be vacant when calculating your expected rental income.

Besides, it is important to understand the local tourist sector, and to get a good idea of what kind of tourists you can expect. Bear in mind that families with children will have requirements that are very different from young couples or people who are retired when it comes to choosing holiday accommodation.

At Dia Soleado Invest, we offer you a variety of excellent buy-to-let investment opportunities, many of which come with letting programs that offer guaranteed rental returns, for your complete peace of mind. Contact us now for more information.