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Considerations before Buying a Property Abroad
  • 15 Dec 2022

Considerations before Buying a Property Abroad

Two of the biggest real estate investment markets right now for foreign investors are the United Kingdom (UK) & the United Arab Emirates (UAE).

The UK continues to have some of the most expensive real estate on the market. In a similar vein, the migration of employees to the UAE is among the most well-liked real estate investment locations. In the United Arab Emirates, particularly in Dubai, there is still a very large market for real estate investments. Having that said, there is a significant price gap between these two areas. Luxury apartments, for instance, are more expensive in London & other areas of the UK than the same kind of properties found in Dubai.

However, both the UK and the UAE property markets continue to draw both long-term buyers and profit gamblers from around the world, so a purchase in either region might prove to be highly profitable.

Here are some things to consider before buying property in one of these two beautiful locations.

1-Rental Yields: Investing In Real Property for Rental Income:

The prospective rental income of properties is the first aspect that investors may wish to think about. For investors interested in using real estate as a source of rental income, this is crucial information. Rental yield is a crucial consideration before buying a property since it impacts the homeowner's resale value, even for investors who plan to resell the home after a few years.

UAE Rental Rates Are Higher Than Those in the UK:

In general, rental rates for real estate in the UAE are higher than those in London and others in the UK.

According to market data and studies currently available, rental prices in the UK aren't much higher than 3%. The majority of other European cities share this. In contrast, rental prices in the United Arab Emirates might exceed 10%. In comparison to renting out properties in London, the UAE presents a comparative benefit of three times the income.

Greater Prices in London Don't Always Demand Higher Rents:

One unusual fact you should be aware of if you're considering investing in England's real estate market is that homes with higher prices don't always translate into homes that can command higher rent from tenants.

2-Long-Term Market Stability:

If you intend to resell your house after several years, the strength and stability of the market should be the financial factors to consider you take into account. The UK economy has historically been a comparatively stable and robust market economy, with the real estate sector in particular.

London's Quick Capital Appreciation Pace:

Real estate investors that favor London above other cities want to profit from the city's rapid capital growth. The key takeaway appears to be to buy now while prices are low & ride the rate at which real estate values increase. After all, compared to other highly developed global financial centers, London possesses one of the comparatively rates faster of capital appreciation.

Investors that purchase properties with the intention of profiting from the margin when the opportunity to sell at a profit arises will benefit from this. However, some investors just care about the interim period. These are owners who want to use the rentals to supplement their monthly income rather than relying solely on the possibility of a jackpot after waiting for several years for property values to increase.

Dubai Investors Are Purchasing Homes Rather Than Apartments:

Only in the 2000s did real estate potential in the UAE properties market start to draw in foreign investors. This resulted from Dubai's rapid and extensive real estate development projects. But around the beginning of the second decade, the growth rate of real estate prices in Dubai peaked.

Investors are increasingly choosing detached homes and villas more frequently, which is the dominant way in Dubai. According to market analysts in Dubai, sales of villa and townhouse units reached a record high in 2021. Both the high-end and low-end markets for detached housing and villas have seen record-breaking sales. In 2021, housing prices rose by 5%, and this trend is predicted to continue well into the following year.

3-Property Pricing and Cost Of Living:

London is still one of the cities in the world with the greatest cost of living. This is a result of the area's comparatively expensive mortgage payments and the rent that middle-class employees must pay for their residences. To contrast the two markets, consider the following indices:

·         If you factor in rent, consumer prices in London are 18.76% more than they are in Dubai.

·         London rental costs are 15.52 percent more expensive than those in Dubai.

·         When compared to Dubai, London's local purchasing power is 22.88% lower.

·         London's grocery costs are 8.16% more expensive than Dubai's.

·         You would pay 36.75% more to eat at eateries in London than in Dubai.

UK and UAE Price Comparison:

A home in Dubai would cost roughly $5,900 per square meter. This would be about 120 square meters in size. Comparatively, a comparable apartment of the same size in London would cost around USD$26,260. The dearth of fresh real estate development initiatives is largely to blame for London's relatively higher pricing. There are hardly any available locations for new real estate development projects in the heart of London.

North And South Divide In London:

Before investing, you should be aware that UK houses in the midlands typically cost less than those in other parts of England. Another crucial finding is that rental homes in the north often generate larger returns than those in the south. According to analysts, the historical information on rents supports this view.

Wrapping Up:

The UK real estate industry has generally remained a pretty mature and stable market for the majority of recent memory, which is the main benefit of buying luxury flats in London. This makes it extremely improbable that London's strong pace of capital appreciation is just a coincidence.