Investing in Dubai flats

[Jason Bierman]

Good morning all, I was talking to a friend today who lives in Dubai. This friend informed me of an investment opportunity in Dubai renting out flats (multi room apartments) by the room. I was told the investor pays to lease out the entire flat for 6-12 months and then sub-leases the individual rooms for a profit. Anybody have experience doing this or experience in buying flats and renting them out this way? Jason Bierman

[Morgan Nilsen]

@Tiffany Griggs as far as I’m aware, this practice is not legal, but not enforced. This could be wrong so don’t take this as fact until it’s been verified.  At the very least, make sure to get an ok from the landlord if you are leasing from someone else. Dubai has a need for affordable housing, so the demand is there. I have done multiple housing occupants before in Norway and it is very profitable but it requires more management and you will have more tenant issues and vacancies. 

We will discuss this issue further on Friday’s meetup. 

@Sam Josh the exchange risk is not something I would be concerned about. The UAE Dirham is pegged to the dollar so these currencies move together. 

I find that there are other risks related to investing in Dubai however, such as major Developments happening all over the city leaving the investor clueless about supply and demand in the future. Which directly impacts rents and property  value. Another thing I’m looking at is the brand new tax authority that recently introduced VAT on many goods. Only a matter of time before your rental income gets capital gains tax I think. 

If you are purchasing a property in Dubai, also be aware of the 4% stamp duty fee. 

I know several people that invest successfully in Dubai and it might be an ideal market for many investors, but it’s not for me. I like transparency and slow moving market prices so I can predict my investments to a higher degree of certainty.