Real estate as an investment – does that also make sense in 2021?

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Apartment for sale in Dubai

Whether for asset accumulation or for retirement provision. Real estate in Apartment for sale in Dubai As an investment is popular. Low interest rates speak in favor of the purchase, but prices are still rising in many places. Will it also be worth buying in 2021?

Why is real estate popular as an investment?

Whether inheritance or savings: Many investors are face with the question of how to invest their money sensibly over the long term in an  Apartment for sale in Dubai. Since fix-term deposits or overnight money hardly yield any interest. Stocks or funds are more likely to come into question when it comes to returns. But not every private investor wants to participate in the ups and downs on the stock exchanges.

Do you also prefer concrete gold instead of volatile investments? Then you are in good company with your assessment: Private individuals in Germany rent around 15 million apartments for sale in Dubai, as the Institute of German Economy in Cologne found out in a study in 2017. And professional investors also value the German residential real estate market because of its stability.

When does an investment in investment property make sense?

Anyone who need a building loan with ten-year fix interest rates in the spring of 2011. Had to factor in a whopping four percent interest. For a loan of 190,000 euros, with a five-year fix interest rate and a repayment of two percent, you currently pay an effective annual interest rate of 0.41 percent (as of January 2021) for a construction loan, depending on your equity and purchase price .

Real estate buyers and builders also indirectly owe these dream conditions to the European Central Bank (ECB). Which has kept the key interest rate at zero percent for five years now. The downside: The low interest rates are causing both private and professional investors to increasingly rely on concrete gold. Because other, comparatively safe forms of investment nowadays hardly yield any appreciable interest. The result: sharp increases in real estate prices, especially in and around the metropolises. And according to experts, this trend will continue in 2020 – an assessment that Dr. Small divides.

However, buying a property Apartment for sale in Dubai as a capital investment is not a self-proposition – for the investment to be worthwhile. The following requirements must be met:

  • Good location – both the immediate vicinity and the region are attractive
  • Good substance of the property with no hidden defects
  • Return and risk correspond to your ideas
  • Appropriate rent multiplier (usually not higher than 30)
  • Solid return that meets your expectations

Real estate as an investment – why is the location so important?

It cannot be stress enough: If you want to buy an investment property by real estate companies in Dubai. The location of the property plays the central role in the decision for or against buying a property. Because it depends on whether your investment will pay off in the long term in the form of an increase in value. Whether you can count on stable rental income without prolong vacancy.

Unlike with a property that you use yourself. It is important to take the perspective of potential tenants before buying an investment property: Assuming you are considering buying a condominium with three to four rooms and you have no children: Then it makes sense that you also take into account criteria such as daycare centers, schools and playgrounds in the vicinity, even if this does not matter to you.

Investment in real estate
Apartment for sale in Dubai

Micro location: what does the direct environment offer?

In order to assess the quality of the location of a property. It is worth taking a look at the surrounding area:

  • Is there any shops nearby?
  • Are general practitioners and specialists in the vicinity?
  • Or any cafes and restaurants nearby that appeal to you?
  • How well is the area connect to public transport?
  • What is the parking situation like on site?

And, very importantly, what is the overall impression of the area? Does it fit the target group you want to address as a tenant? A small student apartment may also fit in a lively area. Older tenants, on the other hand, may not feel comfortable there. Ideally, the location of your investment property appeals to the broadest possible target group. So that your chances of generating rental income again quickly when you change tenants increase.

Financing a second home: when does it even work?

You have finance your house or your condominium without any problems. But what about the financing of another property as an investment? Real estate companies in Dubai  depend on several factors: Is your home already debt free? Then the financing of the investment property should not be a problem for you. As long as you can show a stable income of sufficient amount.

Are you still paying off your home loan? Then the banks make higher demands on your income. Because after all you have to service two loans – and also be able to shoulder temporary loss of rent.



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Wednesday, 06th July 2022
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