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Originally Posted by dave3076
7.5% NET on a new build in a rising property market in a country with sound political and social structure, AND TAX FREE is pretty good. Try gettin one in the UK. Make sure you put the kettle on before you search tho.....you`ll be there for 10 years!. Also, foreign exchange risk is something that goes with the territory of investing abroad. My advice would be that the worst thing you could do is to sell it. The dollar hasnt exceeded far past 2 to the pound for over a decade, so if you had the same investment, with the same calculations you have done above BUT the dirham was at its median value to the pound of around 5.5, your rental figures and sale prices would increase by nearly 40%. That then turns the net yield into over 10% and your for sale tag at around 90+k. NICE!. For your information, the topic of the dirham splitting its pegs to the dollar has been in the political pot. Maybe 2010-2015. Check out the rates of similar middle eastern countries exchange rates with the pound!. Further to this, you assume the property market in dubai is likely to become stagnant. How and why do you assume this. A body in motion tends to stay in motion. If you quantify demand to supply in figures there is statistical and anecdotal evidence that demand from investors, tourists, workers, and potential ex pats will come flocking. The workforce needed in dubailand alone is likely to half fill international city. I think the future is sound for int city....
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7.5% nett is my figure after just deducting 2 charges and i have also mentioned if you live in Dubai then the tax free situation,managing the property yourself(one or 2 is ok but then if you have 20 you have to get professional) does help. But, remember these properties are meant also for people who live in India, pakistan,the UK ,USA etc etc and tax has to be paid on your rental return, flight tickets stay in Dubai ,completion costs,void periods,furshings etc etc.
If you want to go into investment yields in the UK,well, being a professional landlord for 10 years the market currently works is adding value to run down properties and moving on,rental yields are as low as 3%.
The only reason, i think property will stagnate if it hasn't already is rates are on the up world wide,completion of alot of projects bringing in supply,investors world wide feel the squeeze as cheap money disappears, then you could always argue that in New zealand with rates of 7.75% hasn't brought about a crash,but then Dubai is still expanding and projects crop up every month,if not every week and most importantly majority of people come there temporarily not for a life time and those who retire only do so cause it's a TAX FREE state, and not for the weather. Is this tax free state going to remain tax free ???
I am sure you are aware with banks already offering rates of 6.3% on your cash and borrowings if not fixed upto 7.5%, you are better off putting your cash in saving accounts .