Dubai is not only a city of chic skyscrapers but also an emirate that provides a lot of opportunities for profit. For many people, investment in Dubai is limited to just investing in real estate but in fact the investment market provides much more opportunities for enterprising investors.
Shares are securities the acquisition of which is accompanied by a partial vesting of the owner with the rights to the organization. That means that by acquiring them a person becomes a member of a joint-stock company with rights to a company commensurate with the share of acquired assets.
What are the options for investing in stocks?
1. Getting profit on the difference in amounts. Shares are an instrument with a floating range of value that is the price of shares can either increase or decrease over time. For example, a person in 2015 acquired the assets of a newly opened and starting company for 1,376 AED. With positive dynamics, their value in 2021 increased to 12,874 AED, therefore when selling a person will receive a net profit of 11,498 AED. But it should be borne in mind that the value of shares may decrease then the investor will not only not receive a profit but also lose the invested funds.
2. Receiving profit in the form of dividends. Dividends are the company’s profits divided between all shareholders in a share ratio received over a certain period of time. Receiving dividends is a good option for passive income in Dubai as it is enough for a person to choose the right organization and acquire assets from it.
To purchase shares investors will need to register and obtain the investor’s national license plate (in the UAE, this is NIN). Only after that the investor can “enter the stock market represented in the UAE by three exchange centers:
- Nasdaq Dubai.
- Dubai Financial Market.
- Abu Dhabi Securities Exchange.
Unlike stocks bonds cannot be sold at any desired time. These are loans with a fixed term. The process of buying them is as follows: an investor invests in a company and receives fixed-term bonds in return. The profit from the purchase of bonds is to receive interest but the terms of payments depend on the type of bonds.
There are 5 types of bonds:
- With a fixed interest rate.
- Floating rate.
- Convertible bonds.
- TIPS (issued only by the Treasury, their distinguishing feature is the presence of inflation protection).
- Zero-coupon bonds.
Therefore investing in bonds comes with big risks. If the company becomes bankrupt, the investor will not receive his profit from the work of the organization.
In the territory of the United Arab Emirates a company called National Bonds (UAE national bonds) is owned by the ICD organization under the government. The right to purchase government bonds is granted to UAE citizens and foreign residents from the age of 21.
Such funds are created by several investors, they collect a certain amount of money and invest it in bonds, gold, real estate, etc. The income from such investments in Dubai is to receive equal profit for all investors from investing. This method is slightly different from buying shares, since the investor does not own shares, but a unit (shares).
There are several types of mutual funds:
- Passive – mainly specialize in stocks and bonds, “work” on the principle of an index strategy with minimal risks for invested funds.
- Active – calculate and analyze the situation in advance, they choose the most profitable assets for investment, outperform the market and are often aimed at making high profits.
ETFs are a bit similar to the stock market but they are an index fund that sells units on an exchange. OH provides excellent diversification and gives you the opportunity to make good profits from a larger number of purchased securities. The main difference from mutual funds is the transparency and greater security of assets. By buying stocks or bonds ETFs a person receives dividends from the fund’s profits.
REITs are real estate investment funds. They invest in real estate in the United Arab Emirates.
Types of REITs:
- Equity REIT – funds involved in the acquisition, lease, sale of objects.
- Mortgage REIT – structures that issue mortgage loans for real estate.
Investing in a REIT is the possibility of acquiring shares of the funds and making a profit by paying dividends and increasing the value of the organization.
Real estate investment
Investments in Dubai in real estate attract foreign residents primarily due to the absence of a tax payment on capital gains. It is the most profitable to buy real estate at the development stage. In this case you can save up to 20 – 30% of the total cost of the facility after its commissioning.
There are 2 ways to make money in real estate:
- Capital gain. It implies increase in the cost of apartments or villas over time. The average return on investment in real estate ranges from 5% to 9% per annum, depending on the object.
- Renting an apartment/villa and receiving passive income.
When you decide to buy an apartment, it is not necessary to immediately have the entire amount, many developer companies offer favorable conditions on the basis of a mortgage with a down payment of 5% to 15%.
If you want to become the owner of one of the chic and luxurious apartments or villas in the UAE, our Limitless Valley company will help you with this. Our staff will present you with profitable investment projects in Dubai, advise on the main legal aspects, help you choose real estate for further investment, collect the necessary documents and accompany the transaction from the beginning of the search for an object to the conclusion of a purchase and sale agreement.