Turning Installments in Dubai from a Liability into an Asset: 3 Real Estate Investment Models

The UAE real estate market, especially in Dubai, attracts investors from all over the world. And one of the most popular ways to purchase properties on the primary market is installment.

But installment is not just a way to buy, it is a tool that, with the right approach, can be turned into an effective investment mechanism that provides significant income. Let's look at three main models that allow you to maximize the potential of installment to increase profits.

This model involves making the main payment after the completion of construction and transfer of the property. This significantly reduces the financial burden on the investor at the initial stage.

You can start receiving rental income almost immediately after receiving the keys, using it to cover the monthly installment payments. In fact, you earn on rent while simultaneously paying off your investment.

Pros:

• Minimum down payment: Allows you to invest in more expensive real estate, using your existing resources more efficiently.
• Rental coverage: Rental income can fully or partially cover monthly installment payments, minimizing your costs.
• Guaranteed income (subject to high rental demand): You receive a stable passive income.

Nuance: Real estate with post-installment payments is usually more expensive than similar properties with standard payment plans. This is due to additional risks for the developer. It is necessary to carefully evaluate whether this price difference is justified, given the potential rental income.

In this model, you pay a significant portion of the cost (for example, 30-50%) at the stage of concluding the contract, and the remaining amount after the completion of construction.

The main advantage is the ability to resell the property before the last payment is made. In this case, the obligation to pay the remaining amount passes to the new buyer.

Pros:

• Quick payback: Possibility of quick resale at a profit, especially in areas with high price growth dynamics.
• High capital growth potential: In areas with developing infrastructure (for example, new areas with actively built objects, areas near new casinos or resorts), the price of real estate can increase significantly during the construction period.
• Accelerated profitability: Possibility of receiving a profit from resale much faster than with full payment and subsequent resale.

Nuance: This model is only suitable for properties located in areas with confirmed and high rates of price growth. The risk is that if the market changes, resale at a favorable price may not be possible.

For UAE residents, there is the option of obtaining a mortgage for the remaining amount in installments after the completion of construction.

Interest rates are usually in the range of 3.7-5% per annum depending on the bank and credit history. This allows you to reduce the financial burden, similar to post-installment. Rental income can be used to pay off the mortgage.

Pros:

• Reduction of the financial burden: Spreading the payment over a longer period.
• Rental coverage of payments: Similar to model 1, the rent can be used to pay off the mortgage.
• Availability for UAE residents: Opens up investment opportunities for those who do not have the entire required amount at once.

Nuance: This model is only available to UAE residents.