Dubai / Bali - Real estate

[Zaiga]

Hey guys!

I've an understanding about my real estates home market, but I am not a big expert on real estates in Dubai (UAE) or Bali (Indonesia).
As far as I understand, this two market's work differently (less price increase / higher rents etc..), but without going too much into detail - they both deliver good ROIs.

I want to ask you guys, do this both markets really deliver a good ROI on renting out apartments?
Or is it just wishful thinking and only reserved for top picks?

Would you suggest investing into real estate in Dubai / Bali and where to start?

Thanks!

 

[troubled soul]

I find this website https://www.globalpropertyguide.com/
Very helpful for detail guide. They cover all aspect what you are looking for. All details.. Not only Dubai and Bali but most investable country.

Having said that, I also want to mention one point that , If you are just looking for real estate investment with high yield... I would recommaned you real estate crowd funding platform. They are many Just google search... They can give you very high return without much hassle and headache.

Now Let's Talk about Dubai and Bali....Yes both are giving high ROI but Mind you high risk= High Return.... ""Past performance is no guarantee of future results" "

1)Dubai
Biggest benefit of Dubai compare to Bali is that Property are Free hold ...It is like buying home in country.
Yes Dubai holiday rental or Normal Yearly rental can give you high return.
But There is a catch is called "Service Charges" is like a Property tax/maintenance charges which quite high....in Simple word It is kind of Broad day light robbery.
Whenever You buy property in Dubai, First question You have to ask is what will be service charges which can eat your profit ..

See In Dubai , everything is very transparent , Just you need to do research....Property selling/rental deal with price are publicly available.
Even You do not need depend on anyone for data
Just use
DUBAI REST – Apps on Google Play
It is official Government app for Dubai land Department. You can check deal and service charges of particular property yourself.

https://dxbinteract.com/Even by using this Website You can get detail about each unit if you know the UNIT number.

https://www.propertyfinder.ae/It is property finder website (Non Government ).It is private Website.

All You have to do you just Find your property on property finder....get price ....get service charges detail.....

Your Net Return = Rental price - ( Service Charges + Property Management fees)

Yes There is one community called "The Sustainable City"....As It is solar community .which have zero service charges....Also Look into that also.

When you research on Dubai property you will find many Hotel/branded residence with guaranteed return. Just run away from them even without guaranteed return ....Just run from them....even top Developer Emaar offer Address hotel residence .......Do not buy that also ...It is only good for personal use . Not for investment..As I told you earlier Address/Armani any high end hotel residence have quite high service charges and very hard to resell it ..as Its market is illiquid...

Villa have low service charges compare to apartment.....

One thing I also want to mention Dubai is strange cities .....I do not have word for that....So I "called strange."...

Dubai developer Emaar has confirmed that holiday home rentals will not be allowed in its Downtown Dubai development.

https://gulfbusiness.com/emaar-says-downtown-dubai-will-stop-holiday-home-rentals/
As Emaar, Top property developer (Government owned) started their own Holiday rental management company . They basically create monopoly for themselves . Other company will not allowed to run Holiday rental management in Emaar own Area...You have to pay whatever fee they ask for Holiday rental management...

Hope this Help ......

2) Bali
In Indonesia, It is very complicated... The property is not Freehold ....

Rules are like this,

Ownership of Freehold land (Freehold, Hak Milik) is a benefit only available to Indonesian citizens, and foreign citizens have often partnered with an Indonesian citizen to acquire land, through several non-registered legal agreements to gain beneficial ownership and control over that land for their own use. The Indonesian partner will normally charge an annual fee and percentage of the eventual selling price as part of this arrangement. Although this is a common way to operate, it’s important to know that this system is not formally accepted by Indonesian courts and the investor stands a risk to lose his/her investment.

HGB – a secure and recognized way to own land in indonesia
HGB (Hak Guna Bangunan) is an endorsed legal and transparent way for foreign citizens to invest in land in Indonesia, albeit only when they intend to build within a set timeframe. HGB titles are registered by the government and can be held either in an Indonesian citizen’s name or by an Indonesian legal entity. These entities can be a set up as a PT / limited liability company under Indonesian law and domiciled in Indonesia. The company can be structured to be either 100% foreign owned, operated jointly under a JV partnership or 100% Indonesian owned.

The HGB title runs over 30 years with extensions for 20 or 30 years at a time. An extension means paying an administration fee which is currently approx. 2100 Euro for 20 years extension. This title can be transferred to or inherited by both foreigners and Indonesian citizens. Banks and financial institutions will accept HGB land for mortgage and securitization purposes because it covered by the same planning and land use provisions as Freehold land. All in all, HGB is a secure and recommended way to invest in Indonesia for foreign citizens.

Yes High ROI is achievable....But Over supply or Covid type circus can harm your ROI very badly. And ownership structure is way to much complicated....It is not as simple as Dubai
Service/maintenance charges are quite low....Same as Dubai....some project will give you guaranteed return better to Avoid them...

 

[stronco]

Dubai: I don't agree that Address (jbr) is bad. Have a friend there making a killing on airbnb. I almost purchased one unit last year, but sadly it got sold in a few days. Now Russians have occupied the place and pumped the prices, so I will pass.

Bali: Just purchased a place in Bali recently. Similarly to DXB we have Russians with their crypto money pushing up prices. You can go freehold, given the rise of prices of leaseholds, freehold could make sense. But you have to do it through a company or via local person. There is always some risk that govt might crack down on this work-around, but I think that the old contracts will be grandfathered in (this is speculation). Freehold market is thin tho. The current situation here is that there are hundreds if not thousands of villas being built here now. There are no standards for construction and airbnb reselling dominates. High ROIs make people play short term game even more. If you are used to EU construction standards, you get to choose between bad and super-bad. But this is a jungle island, so....

 

[troubled soul]

Dubai: I don't agree that Address (jbr) is bad. Have a friend there making a killing on airbnb.

I never said Bad investment ...My point is service charges is high which eat your profit compare to Normal Apartment....
I am talking about Address Downtown, Address Fountain View, Address Dubai mall ,Address Boulverd....
My friend Address JBR is new and some complicated ownership not Emaar Build If I am not wrong...Yes It have lower service charges around 30 AED/sqft....But It is Dubai You never know they will increase the service charges..........Even with high Occupancy rate You can get high ROI on hotel/branded apartment ...But It is gamble compare to Normal Aparment....

 

[TheCryptoAnt]

Last I checked Dubai prices looked a bit inflated to me, while I also saw a bunch of new construction going on.

Some people told me that 5+ years ago quality of materials/building in general was kinda crap and that the new ones are built to a new standard.

Bali is weird cause you cannot own land. In TH a lot of people circumvent this by owning through a company so maybe it works too in Indonesia?

Tons of people do AirBNB there and seem to be doing ok.

 

[Konstanz]

Don't know about Bali, but Dubai properties are very bad quality.

 

[Zaiga]

I find this website https://www.globalpropertyguide.com/
Very helpful for detail guide. They cover all aspect what you are looking for. All details.. Not only Dubai and Bali but most investable country.

Having said that, I also want to mention one point that , If you are just looking for real estate investment with high yield... I would recommaned you real estate crowd funding platform. They are many Just google search... They can give you very high return without much hassle and headache.

Now Let's Talk about Dubai and Bali....Yes both are giving high ROI but Mind you high risk= High Return.... ""Past performance is no guarantee of future results" "

1)Dubai
Biggest benefit of Dubai compare to Bali is that Property are Free hold ...It is like buying home in country.
Yes Dubai holiday rental or Normal Yearly rental can give you high return.
But There is a catch is called "Service Charges" is like a Property tax/maintenance charges which quite high....in Simple word It is kind of Broad day light robbery.
Whenever You buy property in Dubai, First question You have to ask is what will be service charges which can eat your profit ..

See In Dubai , everything is very transparent , Just you need to do research....Property selling/rental deal with price are publicly available.
Even You do not need depend on anyone for data
Just use
DUBAI REST – Apps on Google Play
It is official Government app for Dubai land Department. You can check deal and service charges of particular property yourself.

https://dxbinteract.com/Even by using this Website You can get detail about each unit if you know the UNIT number.

https://www.propertyfinder.ae/It is property finder website (Non Government ).It is private Website.

All You have to do you just Find your property on property finder....get price ....get service charges detail.....

Your Net Return = Rental price - ( Service Charges + Property Management fees)

Yes There is one community called "The Sustainable City"....As It is solar community .which have zero service charges....Also Look into that also.

When you research on Dubai property you will find many Hotel/branded residence with guaranteed return. Just run away from them even without guaranteed return ....Just run from them....even top Developer Emaar offer Address hotel residence .......Do not buy that also ...It is only good for personal use . Not for investment..As I told you earlier Address/Armani any high end hotel residence have quite high service charges and very hard to resell it ..as Its market is illiquid...

Villa have low service charges compare to apartment.....

One thing I also want to mention Dubai is strange cities .....I do not have word for that....So I "called strange."...



https://gulfbusiness.com/emaar-says-downtown-dubai-will-stop-holiday-home-rentals/
As Emaar, Top property developer (Government owned) started their own Holiday rental management company . They basically create monopoly for themselves . Other company will not allowed to run Holiday rental management in Emaar own Area...You have to pay whatever fee they ask for Holiday rental management...

Hope this Help ......

2) Bali
In Indonesia, It is very complicated... The property is not Freehold ....

Rules are like this,






Yes High ROI is achievable....But Over supply or Covid type circus can harm your ROI very badly. And ownership structure is way to much complicated....It is not as simple as Dubai
Service/maintenance charges are quite low....Same as Dubai....some project will give you guaranteed return better to Avoid them...

Thank you very much for such an indepth answer!
I guess Bali is out, as it's far away and the construction sounds too complicated.

If you are just looking for real estate investment with high yield... I would recommaned you real estate crowd funding platform.

Yes I do, but I very much don't like intermediates. In 95% in 30 year most of them will be gone and probably in some cases also my money.
Especially when it comes to real estates, I would like to keep them directly under my control.

Do you know how ppl (who are living e.g. in Europe) manage the renting of the apartments? Are there agencies which offer a one-stop shop solution?
And would you "trust" - "agents" for picking the right object. Is it possible to find a good real estate agent who won't scam you?

Thank you very much!

 

[troubled soul]

Do you know how ppl (who are living e.g. in Europe) manage the renting of the apartments? Are there agencies which offer a one-stop shop solution?
And would you "trust" - "agents" for picking the right object. Is it possible to find a good real estate agent who won't scam you?

Thank you very much!

Just Google search with "Property management company in XXX country "
In monaco, JB pastor (Biggest real estate developer in Monaco) do provide property management....Just contact them

 

[JimBeam]

Things azb1 wrote are correct about Dubai. I would just like to add couple more things.

There is no tax, but there are fees.
So once you buy a property - you'll pay a 4% of the price from the contract - the DLD fee (basically a 4% tax for buying a property).
Once you resell it the new buyer will also have to pay these 4%.

Once you own the property, and you rent it out, the tenant pays bills (things he uses like water, electricity, gas, cable etc) but you as the owner have to pay the maintenance fees (like cleaning of common areas, cooling for common areas, lobby staff, pool boys, lift repairs, window cleaning etc).

For villas and townhouses these service charges are typically lower (like 5-10 AED/sqft) while for apartment it's more expensive and can go from 10 to 30 or more AED/sqft (we're talking about yearly cost). On top of that you'll have to pay property management fees as well. For an average apartment these costs will be around 20% of your lease. So if you're renting it for 100k AED/year you can expect the costs to be around 20k AED/year. Let's say you you bought a property for 1.2M AED and you're renting it out for 100k/year - that's about 8.33% ROI. But once you deduct the service costs that becomes 6.67% ROI. So keep that in mind.

 

[myhand]

Would you suggest investing into real estate in Dubai / Bali and where to start?

Dubai I would have no doubts Bali I don't know.

 

[JJReddick]

Things azb1 wrote are correct about Dubai. I would just like to add couple more things.

There is no tax, but there are fees.
So once you buy a property - you'll pay a 4% of the price from the contract - the DLD fee (basically a 4% tax for buying a property).
Once you resell it the new buyer will also have to pay these 4%.

Once you own the property, and you rent it out, the tenant pays bills (things he uses like water, electricity, gas, cable etc) but you as the owner have to pay the maintenance fees (like cleaning of common areas, cooling for common areas, lobby staff, pool boys, lift repairs, window cleaning etc).

For villas and townhouses these service charges are typically lower (like 5-10 AED/sqft) while for apartment it's more expensive and can go from 10 to 30 or more AED/sqft (we're talking about yearly cost). On top of that you'll have to pay property management fees as well. For an average apartment these costs will be around 20% of your lease. So if you're renting it for 100k AED/year you can expect the costs to be around 20k AED/year. Let's say you you bought a property for 1.2M AED and you're renting it out for 100k/year - that's about 8.33% ROI. But once you deduct the service costs that becomes 6.67% ROI. So keep that in mind.

Very well put. Also its good to keep in mind that the overwhelming majority of buildings, including the newer ones from Emaar and Meraas tend to have low standards of quality, meaning that the owner is likely to incur in significant maintenance costs down the line. Therefore if one is to do a DCF calc of what kind of ROI to expect, I'd say either use a higher discount rate or account for significantly higher maintenance costs