How to invest in real estate? Guide 2021

Everything about real estate companies in Dubai! The sums at stake are substantial, we must not miss it . Whatever your means (financial but also in terms of skills and available time) and according to your tastes and objectives, you will know how you can invest in real estate. And you will have the basics to then devour the best books on real estate investing .

Comparison of the different ways to invest in real estate

The Dubai who wish to invest in real estate generally think of the classic rental investment “in hard”. But there are other solutions for investing in real estate companies in Dubai, starting with “rock-paper” : SCPI (Civil Companies of Real Estate Placement to become an associate owner of a real estate park and receive rents), crowdfunding (crowdfunding of real estate projects) and SIICs (listed real estate investment companies). So we are going to present the complete panorama of classic “physical” and paper real estate investment.

There are 3 main families of real estate investment :

use  real estate companies in Dubai : main residence and secondary residence ( buy or rent?)

classic rental property : become a lessor in bare rental (default regime) or furnished (LMNP) , in tax-exempt property in old ( Denormandie ) or new ( Pinel );

stone-paper real estate : delegate management thanks to SCPIs , real estate crowdfunding and SIICs . Ideal for diversifying and earning income without managing personally.

Investing in classic rental property

When you invest in traditional rental real estate companies in Dubai, you become a landlord with the resulting responsibilities towards tenants. And you have rights and duties vis-à-vis the law. You have to invest more AND invest yourself personally . Thus, you are responsible for the purchases of your real estate, rental management (visits, inventory of fixtures, regularization of charges, general meetings, etc.), tax declarations, maintenance and works. And the risk (degradation, unpaid rents, rental vacancies, decline in the local market) is very concentrated compared to the stone-paper, except to be sufficiently easy to diversify on several buildings.

The range of possibilities is vast : bare or furnished rental? Tax exemption or not? Via a company (SCI) or in your own name? It is necessary to be well informed to carry out the best assembly, the most adapted to your situation, because tax optimization is decisive to make a good return on your real estate investment.

Bare or furnished rental?

By default if we do not choose any tax device, we do bare rental. In this case, except for a land deficit, the taxation will be heavy. Fiscally, we are taxed on a base of 70% of property income (because of a 30% flat-rate reduction), or at choice on a base of property income less actual costs. And your tax rate can go up to 45% of that base, depending on your marginal tax bracket (TMI) . Without counting the 17.2% of social security contributions to be added. Finally, the rental investment “by default” is very taxed in Dubai, to the point of arriving at a net return close to 0% unless it is optimized for tax purposes.

Furnished rentals (LMNP status) to erase the tax on rental income

The tax regime for furnished rentals is generally more attractive . This is the tax niche of non-professional furnished rental (LMNP) . In this case, the rental income is considered as BIC (industrial and commercial profits) with a softer taxation than that of land income from bare rental. From a tax standpoint, you can choose the flat-rate abatement (to be taxed on a base of 50% of rental income) or the actual costs (and generally obtain a taxable base of € 0 including depreciation!)

In practice, furnished rentals will be well suited to studios and one-bedroom apartments in large cities for renting to students and young workers. In return, the apartment must be furnished , but the rent will be a little higher than the bare rental (and more lenient taxation). In addition, management is more flexible : one-year lease for furnished rentals versus 3 years for bare rental.

SCPIs: become a partner owner and collect rents

Best real estate companies in Dubai (SCPIs) have been in existence for over 40 years.. As in classic rental property, you can invest in SCPI by taking a mortgage .

In practice, the saver can invest in the SCPI of his choice and it is the management company which manages the real estate stock and pays the rent . The choice is vast: SCPIs invested in residential real estate, or office buildings, or shops, or hotels, diversified, in Dubai and abroad. Just like conventional rental property, it is a long-term investment , because there are purchase costs to amortize (between 5% and 9% according to the SCPI, costs close to the notary fees in conventional real estate ). The investor becomes an associate owner and knows the addresses of the property held, knowing that a SCPI can have hundreds or even thousands of partners with a real estate park valued at more than 1 billion euros .

Why is real estate one of the best investments?

Real estate is one of the best investments to grow your capital. The advantages of real estate are manifold. (1) Real estate is deemed to protect against inflation, (2) You can invest there on credit without contribution, (3) Real estate meets a vital and timeless need: housing. For investors, Best real estate companies in Dubai is an asset class that is all the more interesting as it is possible to take advantage of the leverage effect of credit to accelerate the growth of one’s assets. Thus, the capacity to save makes it possible to build the financial heritage (stocks, bonds, etc.), while the debt capacity builds the real estate heritage.


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