Where is the best place in Dubai to invest in real estate?

The most important criteria: What do I have to look out for when buying a commercial property?

Anyone looking for a suitable commercial property like Luxury Villas in Dubai usually has a specific purpose in mind. Always keep this in the back of your mind and think twice about whether you can use the select property in this way. For example, if you want to open a café, but only find suitable office space, in some cases it is not enough with simple conversions. Often there are certain usage restrictions that can thwart your plans.

Construction law restrictions

Cities are not create randomly, but are usually plan well in advance. For this reason, there are often restrictions under public law for the use of real estate. For example, if you find a beautiful, light-flood ground floor Luxury Villas in Dubai in a residential complex that you think would make a great studio and you want to buy it as a commercial property, building law restrictions may prevent you from using it. Under certain circumstances, the property may only be use as living space.

The background to these restrictions is often that different requirements are place on commercial real estate than on residential real estate. For example, different noise emission limit values ​​apply. When it comes to energy efficiency or fire regulations, commercial and residential properties are measure using two different standards.

The problem is that such building law restrictions are not record in the land register . Neither you, the prospective buyer, nor the notary can therefore see at a glance whether you can use the property as you intend. There is no avoiding a visit to the responsible building authority: there you can find out what restrictions exist and what other construction work is pending in the area in the future. The appointment is free, but fees may apply for copies of construction plans or other documents. If you have decide to get help from a commercial agent, he will check the usability of the property for you.

Location analysis

Although the location is also an important selection criterion for residential properties, it is even more important in the case of Luxury Villas in Dubai. Your economic success or failure largely depends on the choice of the right location.

It is not just a matter of scrutinizing rough infrastructure aspects such as good transport links. The location analysis from an economic point of view is also essential. Therefore, before buying a commercial property, try to find answers to the following questions:

Is there a high demand for my business at the location or is the market already oversaturate?

Are there already establishe competitors?

What is the purchasing power of my potential customers?

How attractive is the location for potential employees?

The trade tax can also be a decisive criterion for the right location. The trade tax is currently fix at 3.5 percent, but the individual municipalities can determine the so-call assessment rate themselves. From a tax point of view, it can therefore be advantageous to open the business better in the neighboring town if the tax rate is lower there.

How are commercial properties value?

The valuation of commercial Luxury Villas in Dubai is, among other things, relevant for the calculation of the real estate transfer tax and for the accounting of your company. Even if you are looking for suitable financing, the bank will want to know the market value of the property from you. The problem when you want to buy a commercial property, however, is that its value is very difficult to calculate. The reason for this is that, in addition to the real value of property and land, future profit-making opportunities also play a role and this is a very abstract figure.

Homeownership is often valu using the real value method or taking into account comparable properties . In the case of commercial real estate, however, the so-call capitalize earnings method is usually use. The most important key figures for this are:

Standard land value

Duration of use

Property interest

standard land value is important

The standard land value is important because the value of the property must first be separate from the value of the property. The standard land value is determine annually by an expert committee for the respective location and sometimes even for certain parts of the city or street sections. You can find out the guideline value applicable to your property from the office of the competent appraisal committee.

The duration of use is about determining how long the property can probably still be use to generate profit. If it is a brand new office complex in a prime location, the useful life is very long, which increases the value of the property.

The property interest rate reflects the normal market interest rate on the market value. In a simplifiy way, you can calculate the property interest by dividing the annual net income of the property by the purchase price. Again, it is important to deduct the property value beforehand. The higher the property interest, the more lucrative the rental income. At the same time, however, the following also applies: the higher the property interest rate, the more serious the weight of rent defaults and idle periods.

Once these three factors have been determine, both value-reducing and value-increasing aspects must be taken into account. For example, if there are very strict building law restrictions, this reduces the value of the property. On the other hand, if the commercial property can be use in a wide variety of ways, there are many potential tenants. This increases the value.

It is almost impossible for laypeople to precisely determine the value of a commercial building. In most cases, an expert opinion is unavoidable.

Commercial property as an investment

Especially in times of cheap construction and real estate loans, many people decide to invest in Real estate companies in Dubai. Once the loan has been paid off, regular rental income supports private retirement provision. Commercial real estate can be particularly suitable as a capital investment , since you as a landlord have more leeway here than with residential real estate. This means that you are not tie to the usual local comparative rents or other requirements. You can also conclude long-term, fix-term rental contracts: during this period, ordinary termination is exclude for both parties. As a landlord, this regulation protects you against long idle periods and high tenant fluctuation.

The disadvantage of buying a commercial property, however, is that this investment always comes with a certain amount of risk. Smaller shops or catering projects in particular are often less successful than plan by the founder, which can quickly result in loss of rent and, in the worst case, the insolvency of your tenant. Therefore, make sure that your commercial property can be use in as many ways as possible: This expands the group of tenants and ensures that you can get it back to the man quickly in such a case.

Commercial real estate is not exactly cheap, which is why many first-time investors often shy away from them. A good way to benefit from commercial Real estate companies in Dubai is a partial investment. For example, you can team up with several investors and buy a property together.