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Invest in Dubai Festival City: 5 Best Practices in Rental Properties

Like most places in Dubai, the Dubai Festival City (DFC) has become a prime destination for business people, families on vacation, jetsetters, and many others. With lots of wonderful things to experience in the city, it comes as no surprise that the demand for accommodation in DFC continues to soar.

For real estate investors, this is the reason why they consider Dubai as a property gold mine. But to make the most out of it, there are certain things you need to do to get a significant yield from your rental property consistently.

Here, you’ll learn about the five best practices in investing in rental properties in Dubai Festival City:

1. Calculate your return on investment (ROI) like a pro.
Before you even start looking for investment properties, you must first ensure that you know what ROI is and how it should be considered in the entire endeavour.

“ROI” stands for return on investment. Basically, it measures the success of investors and property owners in a real estate venture.
Investing in something should yield a significant return to be considered not a waste of time and money. But how can you ensure that you’ll get as much as you should in return for your investment? Easy. By computing for your ROI.

You can start with the following formula:
Net ROI = Investment Gain – Operating Costs / Investment Cost

Start by taking the operating costs from your net gain. Then, divide the number you get by the overall price of your property. The result will be your ROI for the period you calculated.
If you have a mortgage, you also need to include your down payment and mortgage payments in your calculations. You should also factor in other variables that may be adding to your expenditures, such as:
●    Cleaning and other service charges
●    Repair and maintenance costs
●    Remodelling or upgrade expenses
Pro Tip: If you haven’t purchased a property yet, you can use this as a selection criterion when choosing where to invest in.

2. Stick to emerging neighbourhoods.
Rental properties are among the best starting points in real estate investments, especially when they’re located in emerging neighbourhoods. Communities like Dubai Festival City offer not only market-friendly properties but also high growth potential.
Whether it’s the Marsa Plaza, Al Badia Hillside Village, or Al Badia Residences, you’ll have a better opportunity to maximise your profits in DFC. From luxury apartments to modern villas, you have a wide range of options where you’ll surely find the right rental property that suits your target market.

3. Know your target market.
One more critical factor you should consider before investing in a property in DFC is your target market.
To choose the perfect property, you need to know your audience first. A good understanding of your chosen market will allow you to promote your property to that specific demographic effectively.
For example, apartments are deemed to have higher rental yields when it comes to renters compared to villas and traditional single-family homes. This is particularly true in Dubai’s largely transient population. 
In other words, you must first know who is most likely to rent your property and plan everything else around them. Are they European or GCC expatriates? Or perhaps you want to target the tourism crowd, active adults, couples, or families with children? Choose a property that will most likely appeal to your chosen audience.
Pro Tip: If you’re targeting couples and families visiting DFC, you might want to consider investing in one-bedroom or three-bedroom apartments in Al Badia Hillside Village. This property offers a combination of modern comfort and traditional values, all rolled into one-of-a-kind units.

4. Define your ideal rental period.
Aside from the ROI, location, and target market, you also need to decide the extent of the rental period for your investment property. In other words, you need to choose whether to cater to short-term or long-term rental markets.

Short-term rentals usually have higher returns compared to long term. But with this type of rental, you’ll most likely experience peaks and troughs, depending on tourism travel trends. Usually, short-term rents can be higher when it’s the peak of travel season, but that also means you may need to reduce your rate during the off season.

Of course, short-term rentals have the advantage of flexibility in use, especially if you intend to live in the property yourself for a given period.
But if you’re looking for a steady source of income and consistent ROI, long-term rentals are still the better choice. Usually rented by the year, rent contracts can also be customised. You can set them for renewal every six months or even after three to five years.

This will still depend on your target market. Do some research or feasibility study on the area to get a better grasp of what your ideal renter prefers.
In some cases, you may need to adjust your rental period, especially during the off-peak season. In this case, a long-term rental contract becomes the better choice as it reduces the risk of vacancy, despite of the lower rental rates.

5. Market the neighbourhood.
Promoting your rental property entails marketing the entire neighbourhood as well. This is the very reason why you need to choose a location that appeals to your target market.

When marketing your neighbourhood, be sure to put forward the qualities that appeal to your target renters the most.

For DFC, you can begin by showcasing the Dubai Festival City Mall. There, you’ll find plenty of food establishments offering international and local cuisines, luxury brands, retailers, and groceries, and signature services like car charging stations, prayer rooms, EZ taxi, and many more.
Aside from that, DFC also offers record-breaking entertainment from IMAGINE Dubai, Novo Cinemas, Fabyland, and lots more. For long-term renters, you could also present health and fitness amenities from the Al Areesh Club.

If you’re targeting families, consider promoting the quality schools around the property. In the case of DFC, you have two international schools within reach: the Deira International School (DIS) and the Universal American School (UAS).

If you’re aiming for active individuals and those looking for a luxurious lifestyle, you can highlight the DFC Mall and other nearby attractions that fit their lifestyle.

Invest in Dubai Festival City
Dubai Festival City is a multi-use development that holds plenty of promising properties for investment. Choose your rental property wisely and follow the best practices listed here to maximise your ROI.

Author: Vic Bageria   

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