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What kind of real estate to rent in Dubai and how profitable is it?

Какую недвижимость сдавать в Дубае и насколько это выгодно?

Real estate in the United Arab Emirates is in great demand among investors. Especially in Dubai, one of the most technologically advanced cities. There is a thriving economy, promising prospects in the construction sector, which plays a major role when buying property. Consider how to rent an apartment in Dubai: features and advantages of the process.

Can the owner rent out his home?

Mistress of the apartment on the balcony

The regulation of the landlord’s relationship with the tenant falls under Law No. 26 of 2007, as well as under the additions to it: the surrender of property is available for a period of at least a year. If they are rented for a shorter period, the lease will be considered short-term. In this case, the owner is obliged to obtain a license (permit) for the activities of the hotel/hotel. You can also contact a management company that already has such a permit and transfer your home to management. In return, the firm will rent it out on its own behalf.

How much income can I get from renting a house?

Rental income is the amount after deduction of expenses that will be spent on property maintenance. In Dubai, this figure ranges from 5 to 10% per year. 

The reason is the differences in the types and categories of apartments, the prices of their service, localization. A large return in monetary terms can be obtained when renting houses in accessible areas, up to 15% – retail space. Offices are less attractive in this regard. 

How much can I rent an apartment in Dubai for – are there any restrictions?

Setting the price is the right of the landlord. There are no restrictions here. At the same time, he does not have the right to raise the check when extending the contract, if 2 years have not passed since the date of conclusion of the first contract. Also, if you want to increase the cost, you need to rely on the RERA index, where the average rates are indicated.

Requirements for tenants

A legal entity or an individual with the status of a resident of the Emirates has the right to rent apartments/ houses for a long time. This means that the contract will be concluded only with:

  • a citizen of the country;
  • a foreigner with a resident visa;
  • a citizen of a country from the GCC;
  • a legal entity with the appropriate registration in the country, for example, a business in a FEZ, a branch, a local firm.

You can get a visa by buying a home (from a million dirhams), establishing a company, getting a job in the UAE, enrolling in a university in the country.

Advantages of renting


High income

In order for investments to bring income, it is important to choose the right apartment. The increase in profit is influenced by factors such as location, layout, area. In general, the income is 5-10% per annum. For apartments near the coastal zone, you can get 12% if the rent is short-term.

Constant receipts of funds

Thanks to the hot weather and unique places, the influx of tourists to the country is year-round. In addition, the constantly developing economy and the introduction of innovations in various fields attract entrepreneurs and specialists. Demand is growing – thanks to the high occupancy rate, you will be able to receive a stable annual income.

Remote control

The long-term rental process can be remote. To do this, you need to sign a contract with a broker company that will control the tenant and transfer money to the owner’s account.

Payment by installments with the help of rental income

Many apartments can be bought in installments. To check in, you need to deposit the initial amount. The remaining funds are distributed equally for several years.

The ownership document makes it possible to rent out real estate, and pay off installments with income. The main condition is that the apartment / house must be purchased at the stage of commissioning. If you purchase it at the construction stage, you will have to focus on the year of the project launch. 

Disadvantages of renting


No tenants

Among tourists and entrepreneurs, the demand for real estate with a small area is growing. It should also be localized in the central areas/coastal zone. Houses on the outskirts of the city are likely to make a loss and will be idle.

Presence in the city

Most investors prefer to rent houses for a short time. Such a choice gives a higher profit. The disadvantage is that the owner must be constantly present in the city to find tenants, conclude contracts, and also monitor the order before settling in.

In this case, the management organization will take 20% of the total cost for its services, which will significantly affect the final profit.

Housing maintenance

Maintenance of residential premises will be paid – 30-90 dollars per square meter per year. The price depends on the building project. The funds will be spent on:

  • cleaning, garbage collection;
  • maintaining order;
  • repair work, etc.

It is the owner’s responsibility to pay for maintenance regardless of whether he uses this room or not. 

Mortgage difficulties

Approval for a mortgage loan is issued only after making a preliminary amount of money – 30% of the cost of the object. Also, now they take into account the place of work and the minimum profit of the borrower per month – about $ 1,500.

Types of rental premises


Units in apartment hotels

The units are managed by the hotel – it completely removes the worries from the owner. Moreover, the owner of the unit has the right to rest from 15 to 30 days a year in the hotel where he bought the room. It’s free.

When choosing such objects, pay attention to the location. It’s great if there is a beach and attractions. If the hotel has already been put into use, then read the reviews.

The entry threshold for investing in units in Downtown and Business Bay is at least $ 500,000, in Palm Jumeirah it is more expensive – from $ 700,000.

Some hotels offer the opportunity to purchase only part of the unit – one second or one fourth. This allows you to significantly reduce the entry threshold for investors who have a small budget. In addition, most developers have a guarantee, under which a repurchase is valid.

Service housing

Some tenants come to Dubai for work and do not want to waste time on the selection of real estate. They allow themselves to live in an apartment hotel. At the same time, payment for accommodation is the responsibility of the employer. Usually the term of removal is several months or a year.

Service apartments are popular in Dubai Marina, Business Bay. Here the purchase starts from $ 500,000.

Apartments for a long period

Developers are more likely to rent a living space with finishing, kitchen and plumbing. On the territory of the complexes there are usually a swimming pool, a gym, and relaxation zones.

One of the most popular options for renting is a studio/one-room apartment. Due to the favorable localization and convenient transport interchange, tenants will accurately appreciate such areas as Downtown, Dubai Marina, Al Meydan City, Dubai Creek Harbour.

Two- or three-bedroom options for couples with children are also popular. They prefer the areas of Damak Hills and Jumeirah Village Circle.

When buying this type of rental housing, check whether there are kindergartens, schools, playgrounds on the territory.

The investment threshold for entry is from $ 150,000 for a one–room apartment in Damac Hills.

Villas for a long period

Several villas can be located on the territory of the residential complex. They usually have their own playgrounds, a common park and other infrastructure. There are also single objects in which from 3 to 7 bedrooms.

Most of the villas are located away from the beach. The entry threshold is from a million dollars.

Options for earning money on real estate

Building in Dubai

Rent units and service apartments

When renting through a hotel complex / management company, the tenant will not be able to choose a management company for himself. For their part, the owners of the hotel usually offer the investor a choice between two types of profitability. It can be guaranteed and without it. The second is higher than the first, but has greater risks.

Choosing a guaranteed option, carefully read the terms of the document and compare the purchase price tag with a receipt for similar market objects.

When offering an inflated guarantee amount, there is a high probability that it is already included in the cost of the object. This means that during the period of validity of the contractual terms, the owner will pay you your own money, and when the warranty period ends, the indicator will drop.

Also, when providing guarantees, the hotel reserves a part of the profit. For example, he will take from 5 to 7% of the net 12%. In addition, the hotel’s offer is usually valid for a long time – ten years. During this period, the market growth will continue, and hotels can specify non-indexed profitability in the contract. In this case, when reselling the unit, it will be difficult to find a buyer for such a long time, because the % will remain the same as it was specified in the first contract. As a result, if the first one decides to sell more expensive before the end of the guarantee, then the profitability of the new buyer will decrease.

Rent an apartment/villa

There are several ways to rent a house:

  1. Through the developer’s CC. What was said above – the firm does everything, the owner receives income.
  2. Through Dubai realtors. The conditions may be better than those of the developer, but you will have to look for a realtor. There is also a risk of running into scammers.
  3. Independent search. An option for those who live in Dubai and have time to show the living space. It is also possible to hire an assistant for a fee.

Housing maintenance for rent

Counts money

Landlords must pay an annual maintenance fee for the apartment/house. The amount is calculated by the Land Department. It often varies from three to thirty dirhams per square meter. You need to pay every month. At the same time, the price is affected by the localization of the complex, the number of floors, the presence of a balcony and other parameters.

The amount includes payment for various services – from cleaning to security. Utility bills and the municipal contribution are the responsibility of the tenant.

Objects for different investors

  1. Units. They differ in an average and increased level of risk with a yield of 8% and 12%, respectively. Suitable for those who are willing to spend significantly, understand the risks, and strive to maximize profits.
  2. Service apartments. The profit at the average risk level is 6%, with an increased risk level – 8%. Suitable for those who have a small start-up capital.
  3. Apartments/villas. The risk levels are different: low – when buying a second home with tenants, medium – when renting through a management organization / developer, high – when renting independently. The profitability will depend on the risks and the type of premises, but on average – from 4 to 7%. Suitable for those who plan to move to the UAE in the future, as well as those who want to protect assets and make a profit without high risk.

Now you are familiar with an effective tool for generating passive profit and know how to rent an apartment in Dubai. If the process seems difficult for you, you can always ask for help from a specialist who will find clients on his own and save your time.

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Vladimir Sviridov
Vladimir Sviridov
General Manager RLC Consulting
With a Postgraduate Masters in Finance from The, Moscow State University, Russia. Vladimir started his professional career as an auditor of the financial sector of EY. After that, he worked for several years in senior positions in corporate banking. In 2018-2021, he managed the finances of a large agricultural holding, and is currently responsible for strategic planning, corporate partnership and financial management in the role of General Manager of RLC Consulting GROUP in the UAE.

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