How to rent out your apartment in Dubai? Real estate investment strategies

Buying an apartment for rent for a long time

Today I will tell you about real estate that is intended for rental: what to buy and what kind of income it generates. The number one strategy is to buy an apartment for long—term rental. Who is it suitable for?

This strategy will be interesting for those who do not want to use leverage and do not need installments. It is suitable for those who want to start earning rental income right away. For example, for people who have sold their real estate in another country, for example, in Russia, and want to invest this money in real estate in another country.

Let’s say you sold an apartment in Russia for 15 million rubles. Then you transfer this money to Dubai and buy a property here. This way you will be able to earn passive income, which will be significantly higher than in Russia, and, importantly, in foreign currency. In addition, you can buy an apartment under construction in installments, paying only part of the amount, and the other part when you receive the keys. This is also suitable for those who currently have some money on hand. They can invest it in such an apartment and, for example, use the money received from the business for the construction period. For many, this is a really convenient scheme. It’s great that you can use this free leverage. The risk level of this strategy is the lowest, and it is suitable for those who are not ready to take risks.

The entry threshold is $150,000 in the secondary market, when you need to have the entire amount on hand, and from $40,000 in the primary market. In this case, you, relatively speaking, pay 40 thousand dollars for the first installment and for transaction costs, and pay the remaining 110 thousand in installments for the construction period. Some developers even offer installments for several years after the construction is completed. If you want to rent out an apartment, then when it is ready, part of the rental income will help you pay off this installment plan.

The yield from long-term leases ranges from 6 to 8% per annum. For example, an apartment worth $150,000 will earn you $750 per month. Compare this yield with what an apartment in Russia would bring you for the same price, and you will see that the yield in Dubai is significantly higher.

As a rule, in Russia and Europe, the yield is 2-3%, with a maximum of 4% per annum. This is considered normal in these countries, while in Dubai such low yields are rare. I have never personally seen an object with such a low payback.

The advantages of this strategy

First of all, it is worth noting the low level of risk. The fact is that apartments in Dubai are rented out on long-term contracts that impose certain obligations on the tenant. If he wants to leave earlier, he will be obliged to pay you a fine.

It is not difficult to find a tenant for a liquid facility. In practice, those who are trying to rent an apartment for a long time in Dubai are faced with the fact that finding a good apartment at an adequate price is not an easy task. Therefore, the risk of downtime is minimal, and you can expect that your income will not be interrupted for a significant period of time.

Another advantage is that you will receive money in advance. In Dubai, when signing a long-term contract, your tenant will pay immediately for six months or three months in advance. This means that you will receive a large sum immediately and will not worry about payments every month. In addition, subsequent payments will also be guaranteed by checks. Your tenant will leave receipts with a date that will come in the future. This is called post-dated receipts. That is, the contract was signed today, the tenant paid for six months in advance and provided a check that can be cashed in six months, with the date indicated on it. Thus, the risk of not getting paid is minimal, and usually such situations do not arise.

Unlike other strategies, this one assumes a low entry threshold. You can buy an apartment with the minimum available budget in Dubai for only 150 thousand dollars. If we consider other strategies, the entry threshold will be significantly higher. It is important to understand that you do not have to worry about renting an apartment and controlling payments. All this will be handled by your agent. In addition, in the Dubai market, the commission is paid by the tenant, not you.

The disadvantages of this strategy

First, it is worth noting the relatively low profitability compared to other strategies that exist on the market.

Secondly, this strategy does not involve the possibility of using leverage. This could be a profitable addition, as the free installment plan provides good opportunities to increase income.

Thirdly, it is worth mentioning that the strategy is not highly flexible. In particular, in Dubai, if you rent an apartment for a long-term lease, you will not be able to suddenly evict the tenant and move into this apartment. In addition, selling an apartment with a tenant can create certain difficulties. The demand for such apartments will be limited, as potential buyers looking for housing for personal use will most likely not consider your option.

Now the rental price on the market is growing rapidly. For example, last year the average rent increased by 30%. At the same time, if you have rented out your apartment, you will not be able to increase the rent when extending the contract by an arbitrary amount that you would like. You will be limited by law and will be able to raise the price by no more than 10% after the first year of the lease and by no more than 20% when extended for subsequent years. Thus, in a growing market, your profitability will be lower than the market, as you will be limited by these obligations.

Areas for the purchase of apartments for rent for a long time

In which areas should I buy apartments for long-term rent? I would recommend considering the Jumeirah Village Circle (JVC) area. If your budget is limited and ranges from 150 to 200 thousand dollars, then you should pay attention to JVC. Dubai Hills is also a very interesting area for investment. The City Walk and Business Bay areas offer equally attractive rental options. You can learn more about these areas in the article Top 5 areas for Real Estate investment in Dubai in 2025.

Purchase of real estate for daily rent

The second strategy for buying an apartment for rent is to rent an apartment not for a long time, but for daily rent. This strategy is suitable for those who, firstly, want to receive a higher income, and, secondly, want to have more flexibility.

For example, very often I receive requests from people who say: “I want to buy an apartment so that I can come to it sometimes.” That is, in order for you to come to the apartment, it should not be rented for a long time. However, while you are not there, she can work and bring you money.

In this case, the strategy for buying an apartment for daily rent is ideal for you. I consider the risk level of this strategy to be average, because unlike long-term rentals, here you are more dependent on seasonality and various external events that may limit the tourist flow. As a result, your apartment may be idle for longer than is possible with a long-term lease.

For example, during the COVID-19 pandemic, long-term rental yields remained virtually unchanged because there were many people left in Dubai. Many were stuck in the city and could not leave anywhere, they continued to rent their apartments. And those who rented apartments for daily rent had to wait for the end of restrictions, since there were no tourists in Dubai.

The entry threshold for this strategy is higher than for the long-term rental strategy, and starts at about 350 thousand dollars. However, it is better to count on 500 thousand or more, because you have to buy an apartment in a tourist area. Accordingly, tourist areas are more expensive. If you buy an apartment in the GVC area, it will be more difficult to rent it on a daily basis. It is possible, but there are certain nuances.

If the option to buy an apartment under construction is suitable for you, then you need to have at least 90 thousand dollars on hand for all the first expenses. You will pay the remaining amount during construction in interest-free installments.

The profitability under this strategy ranges from 8 to 12 percent per annum. Sometimes it can be higher, but let’s focus on the averages. For example, an apartment worth 350 thousand dollars will bring from 2.5 to 3.5 thousand dollars per month. The indicated profitability already takes into account all the expenses that you have to bear, including the costs of the management company. Usually, management companies take 15-20 percent of the total revenue and deal with absolutely all issues: from furnishing and photographing to adding your listing to all popular booking resources. They also handle marketing, cleaning, check-in, and eviction. That means you won’t have to worry about these things — the management company will solve all the problems for you.

Advantages of the strategy

Advantages of the strategy: Firstly, the strategy offers high returns with an average degree of risk. This allows investors to make attractive profits while remaining within an acceptable level of risk.

Secondly, the strategy has flexibility. You can book an apartment both for yourself and for your relatives. While you are away in Dubai, you can rent it out. In addition, such an apartment is easier to sell than the one that is rented out for a long time. This is due to the fact that the apartment will be available after the transfer, and if a potential buyer wants to live in it, he can immediately move in.

Another advantage of this strategy is the lack of contract restrictions. This means that your income will grow with the market, which opens up additional opportunities for making a profit.

Disadvantages of the strategy

Disadvantages of the strategy. In this strategy, there is a higher entry threshold, as it is necessary to look for an apartment in a tourist area. In addition, you will be more exposed to external risks, such as the COVID-19 situation that I mentioned earlier. If you are planning to purchase an apartment for long-term rental, I recommend paying attention to the Marina, Downtown and Palm Jumeirah areas. There are also other options.

By Sasha Kosova

✅ Comparison of Russian-speaking neighborhoods in Istanbul

Download the checklist. It’s free!

Download the checklist