The 5 Most Common Mistakes Investors Make in The UAE

The first mistake involves magical thinking. Many investors buy assets, hoping for a miracle, and are going to act on a completely unrealistic plan.

For example, they take out an installment plan in the hope of reselling the property before the next payment. Or take several objects at once, having only 40-50% of their value. This leads to financial losses and a lot of stress.

Once I was approached by a client who bought a property in Dubai with another broker. He promised that in six months they would be able to resell their property profitably. However, when the deadline came, the broker stopped answering the phone.

The client needed to sell the property urgently, so we found buyers. But the price was less than they had hoped for.

Unfortunately, this strategy was unrealistic from the start. Even in such a dynamic real estate market as the UAE, you have to build in a longer payback period, which is usually at least one and a half to two years.

The second mistake is the desire to save money on something that should not be saved on. For example, some investors ask the broker to share the commission received from the developer or reduce the commission when buying on the secondary market.

And some brokers agree to those terms. But that means two things: such a broker is focused on short-term gain → that is, they will get money from the client in the moment and then stop cooperating.

Also they do not value themselves and give in under pressure → that means they do not know how to negotiate and will not be able to defend the client's interests before the other parties to the deal.

You may save 30-50 thousand dirhams on such a deal, but in the long run, when you need to negotiate with the developer on extension of payments or resell the object, such a broker will not be able to get the best terms for you as their client.

The third mistake has to do with a lack of a strategic approach to investing. Success requires an investment strategy. Before you buy a particular object, you need to formulate very clearly: what is your goal and budget, when and how you want to get out of the asset, who will buy it.

Unfortunately, not all investors follow these principles yet. Sometimes my colleagues and I receive requests like, “Send me a list of two-bedroom apartments that are currently on sale in Dubai” or “I want to buy property by Emaar”.

This is not a sensible approach. Investing is more complicated than it seems. You can rely on luck or you can approach the process deliberately, carefully analyzing your actions.

Also, far more important is not how you buy a property, but how you will sell it. Simply placing an ad on PropertyFinder or Dubizzle and miraculously finding a buyer is not going to work.

Most deals in our industry are done through a network of investors and clients around the world, not through listing sites. A good broker knows which of his or her clients might be interested in your property and helps close the deal.

The solution: work with someone who can help you strategize with the specifics of the market, constantly monitor your investment portfolio, and actively seek buyers through their network.

Before I tell you about the fourth mistake, I want to make a disclaimer. I hope my words won't offend anyone, but some people think they know everything about everything — including the real estate market in the Arab Emirates. Their ego gets in the way of listening to expert advice.

This behavior is illogical. If I need a medical procedure, I will go to a doctor and trust him as a professional (even if I have already read all the articles on the subject).

It's the same with real estate: even if you consider yourself knowledgeable, that doesn't mean you know everything that a professional broker who buys and sells properties for his clients every day year after year knows.

This mistake often leads to financial loss. For example, an investor may read that a particular neighborhood is actively developing, and buying in this location will be profitable. But a year later it will turn out that apartments on the secondary market here are sold cheaper than at the construction stage.

Finally, the fifth mistake is lack of direct communication with the broker.

For example, an investor may spend several days with a broker, considering different options, and when the moment comes to make a decision — he stops contacting.

Why does this mistake greatly affect the final result?

Firstly, for the investment to bring the desired results, the broker must be aware of your plans.

Secondly, transactions in Dubai are very fast. It sometimes takes less than an hour to decide on a purchase. If you are not in contact with your broker, attractive properties will go to other investors.