How Does Real Estate Investment Benefit Against Inflation In UAE

How Does Real Estate Investment Benefit Against Inflation In UAE

There is a new law!!

This new law has only been in effect for just over a year so it is hard to tell how it will impact the real estate market. It is unsure if it will have a positive or negative long-term effect, especially on inflation.

However, the law is supposed to provide even more transparency in the real estate market which may have a positive effect on real estate investors and their investments. This in turn may have a positive inflationary outcome.

Time will tell and more data is needed before any conclusions can be drawn and new strategies implemented.

Dubai Has Successfully Fought Inflation

The real estate market is impacted by inflationary trends and by keeping other goods and products at a stable price level influences the amount of investment dollars available for real estate purchases.

The Dubai government has put a price freeze on over 10,000 everyday items. This price freeze helps protect the economy from the damage inflation can do to a region.

Plus, the decision to link the Dirham to the US dollar has kept the Dirham very strong. This is a good inflation-fighting move which also protects the real estate market. However, the Dubai real estate market is leading the battle against inflation.

Fighting Inflation Through Real Estate Investment

Real estate experts have found that the Dubai real estate market is leading the trend against inflation. There are several key reasons why this is taking place.

1. Cash Is Always King

The trend of high-end investors targeting very expensive properties and paying cash has helped beat the inflationary trend in this market.

It is a good example to follow when investing in lower-priced and not-so-luxurious properties. Cash is always king and often demands a price discount.

2. The High Demand

Dubai is still the world’s go-to real estate investment strategy. People from around the world want to cash in on the hot market while it remains hot and make their money through high ROI.

Despite inflationary trends elsewhere in the world, the market in Dubai remains in high demand. This means that there will be continuous growth in the Dubai real estate market regardless of what inflation is doing to the world.

This is a great investment to have a hedge against inflation in troubling times as the demand remains.

3. Affordable Investment

This is one of the main reasons why the Dubai real estate market is in such high demand regardless of inflationary trends. Its prices are still lower than other regions of the world making it a very attractive location to invest in.

These prices remain lower despite the fact that housing and maintenance, and other real estate-related costs have gone up in the city. You can still save money even though prices are higher by investing in this city.

Other regions of the world are experiencing higher-than-normal real estate prices and costs and Dubai has not come close to those expenses yet. This means you can save on costs and still make a good profit when it is time to sell.

4. Real Estate Values Remain Steady

Over time, real estate values tend to remain on an upward curve and this is good in inflationary times. You can still expect your property’s value to increase despite the rise in costs

In terms of appreciation real estate investments have been found to keep pace or surpass inflationary increases. The good news for Dubai investors is that even with current inflation influences, the mainstream marketplace is expected to rise between 5 and 7% and in prime marketplaces, it is expected to go up between 12 to 15%.

This makes Dubai real estate a very good investment to protect against inflation.

5. Rental Fees Increase

Unfortunately for renters, inflationary times influence the cost of their monthly rental payments. This is good news for the investors as they can increase the price of the monthly rent to maintain protection against inflationary cost increases.

Their mortgage payments may not increase during these times but the cost of maintenance, repair, and replacement work does cut into the landlord’s profit margin. Protecting one’s ROI can be done by increasing the rental monthly rental fee.

6. Not A Mortgage-Driven Industry

The rates for borrowing money often rise in inflationary times to protect the economy from inflation. However, this move by central banks increases all borrowing costs.

The good news is that to protect against inflation, the Dubai real estate industry is not driven by mortgage lending. In fact, less than 20% of mortgages account for Dubai property value.

This can cut the costs of investing in Dubai property and help fight inflation.

Other Inflation-Fighting Influences

The UAE and Dubai region have fought inflation through a variety of means even though the UAE central bank recently raised its mortgage lending rates. One of the methods this region has used to combat inflation is to make investment very attractive.

They offer golden and other residential visas in exchange for real estate investment and have not applied any property taxes while allowing high rental ROI and a lower cost per square meter for property.

The biggest tools that this region has used to protect real estate investment and fight inflation have been through an increase in oil production and other oil-related reforms.

The demand for very expensive property has contributed to the lower inflationary rate experienced in this part of the world.

Some Addition Words

When you are looking for a hedge against inflation, contact our estate office. We have been in the UAE and Dubai real estate industry for over 10 years. Our experienced estate agents know how to find the best investment properties in this region to help guard against inflation.

All it takes is one phone call to set up an appointment and see what our estate agent and agency can do for you in these troubling times. Call us today for the investment help you need.

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