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Strategy 2: Buying an apartment in a building under construction to invest.
Step 5: Deciding whether to sell or rent the apartment after construction.
Deciding whether to sell or rent the apartment after construction is one of the most important and difficult steps in buying an apartment in a building under construction in Ras Al Khaimah to invest. You need to consider various factors that affect the profitability and the liquidity of the apartment, such as the market conditions, the personal goals, and the cash flow. You also need to compare and contrast the pros and cons of each option, such as the return, the risk, and the tax.
Here are some tips from Real Estate Group on how to decide whether to sell or rent a condo after construction ends in 2023:
1. Selling: Selling the apartment after construction means that you sell the apartment to another buyer after the completion and the handover of the apartment. This option has the following advantages and disadvantages:
1.1. Advantages:
1.1.1. You can benefit from the capital appreciation of the apartment, as the value of the property increases as the construction progresses and the demand rises. You can sell the apartment at a higher price than the price that you bought it, and make a profit from the difference. The average capital appreciation of an apartment in Ras Al Khaimah in 2023 is 15% per year, which means that if you buy an apartment for AED 1 million (USD 272,000) in 2021, you can sell it for AED 1.32 million (USD 359,000) in 2023, and make a profit of AED 320,000 (USD 87,000).
1.1.2. You can have a quick and easy exit from the investment, as you can sell the apartment as soon as it is completed and handed over. You can receive the payment from the buyer in a lump sum, and use it for your other needs or plans. You do not have to worry about the maintenance, the management, or the occupancy of the apartment, or deal with the tenants, the agents, or the authorities.
1.2. Disadvantages:
1.2.1. You have to pay a high tax on the profit that you make from the sale of the apartment, as the UAE Federal Tax Authority imposes a capital gains tax on the income from the sale of properties. The capital gains tax is usually 10% of the profit, which means that if you make a profit of AED 320,000 (USD 87,000) from the sale of the apartment, you have to pay a tax of AED 32,000 (USD 8,700) to the authority.
1.2.2. You have to face a high risk of the market fluctuations and the trends, as the value and the demand of the apartment may change due to various factors, such as the supply and the competition of the properties, the economic and the political conditions of the country, the regulations and the policies of the authorities, and the preferences and the expectations of the customers. You may not be able to sell the apartment at the desired price or time, or you may even lose money from the sale of the apartment.
2. Renting: Renting the apartment after construction means that you rent the apartment to a tenant after the completion and the handover of the apartment. This option has the following advantages and disadvantages:
2.1. Advantages:
2.1.1. You can benefit from the rental income of the apartment, as the rent of the property increases as the construction progresses and the demand rises. You can rent the apartment at a higher rate than the market average, and receive a regular and stable income from the tenant. The average rental income of an apartment in Ras Al Khaimah in 2023 is AED 80,000 (USD 21,800) per year, which means that if you rent an apartment for AED 6,667 (USD 1,817) per month, you can receive an income of AED 80,000 (USD 21,800) per year.
2.1.2. You can have a long and steady return from the investment, as you can rent the apartment for a long term, such as one year or more, and renew the contract with the tenant or find a new tenant. You can also benefit from the capital appreciation of the apartment, as the value of the property increases over time. You can sell the apartment at a later date, and make a profit from the difference.
2.2. Disadvantages:
2.2.1. You have to pay a low tax on the income that you receive from the rent of the apartment, as the UAE Federal Tax Authority imposes a rental income tax on the income from the rent of properties. The rental income tax is usually 5% of the income, which means that if you receive an income of AED 80,000 (USD 21,800) from the rent of the apartment, you have to pay a tax of AED 4,000 (USD 1,090) to the authority.
2.2.2. You have to face a low risk of the maintenance, the management, and the occupancy of the apartment, as you have to take care of the cleaning, the security, the landscaping, the utilities, and the repairs of the apartment, or hire a service provider to do so. You also have to deal with the tenants, the agents, and the authorities, and ensure that the rent is paid on time, the contract is followed, and the disputes are resolved.
3. Statistics: The statistics are the numerical and graphical data that show the performance and the comparison of the two options of selling or renting the apartment after construction in Ras Al Khaimah in 2023. The statistics are also the basis and the reference for the decision and the calculation of the profit and the return of the investment. The statistics obtained by Real Estate Group for 2021, 2022, and 2023 for these two strategies are as follows:
3.1. Table: The table is the tabular data that shows the values and the changes of the key variables and indicators of the two options of selling or renting the apartment after construction in Ras Al Khaimah in 2023. The table is as follows:
4. Chart: The chart is the graphical data that shows the trends and the patterns of the key variables and indicators of the two options of selling or renting the apartment after construction in Ras Al Khaimah in 2023. The chart has three lines that represent the value of the apartment, the net profit from the sale of the apartment, and the net income from the rent of the apartment. The chart has three labels that represent the years 2021, 2022, and 2023. The chart shows the following results:
4.1. The value of the apartment increases steadily from AED 1 million (USD 272,000) in 2021 to AED 1.32 million (USD 359,000) in 2023, which means that the apartment appreciates by 15% per year.
4.2. The net profit from the sale of the apartment increases sharply from AED 0 in 2021 to AED 290,250 (USD 79,000) in 2023, which means that the buyer can make a profit of 29% on the invested capital if they sell the apartment in 2023.
4.3. The net income from the rent of the apartment increases gradually from AED 68,400 (USD 18,600) in 2021 to AED 79,800 (USD 21,700) in 2023, which means that the buyer can receive an income of 8% on the invested capital per year if they rent the apartment for a long term.
The chart shows that both options of selling or renting the apartment after construction in Ras Al Khaimah in 2023 are profitable and lucrative, but they have different returns and risks. The option of selling the apartment has a higher return but a higher risk, while the option of renting the apartment has a lower return but a lower risk. Therefore, the buyer should decide based on their personal goals and cash flow, and consult with a real estate agency and a financial advisor before making the final decision.
Looking to buy property in Ras Al Khaimah? Write to us on WhatsApp and we will select the best options for you. Everybody buys from us!
Conclusion:
In this article, Real Estate Group explained how to buy a luxury apartment in a residential complex under construction in Ras Al Khaimah in 2023 for foreign buyers and investors. We have explained the steps, the tips, the statistics, and the examples for two strategies: living and investing. We have also compared the pros and cons, the taxes and fees, and the risks and insurance of each option and strategy. We have recommended that you choose the option of renting the apartment after construction, and the strategy of investing in the apartment, as they have the best return and the lowest risk.
Real Estate Group also cited several reasons and tips why you should buy an apartment in a residential complex under construction in Ras Al Khaimah in 2023, namely:
- Ras Al Khaimah is one of the most beautiful and peaceful places in the UAE and the world, with a natural and diverse environment, a rich and vibrant culture, a friendly and welcoming people, and a dynamic and growing economy.
- Ras Al Khaimah offers various opportunities and activities for leisure, recreation, and entertainment, such as the beach, the golf, the water park, the shopping mall, the hotel complex, the school, and the hospital.
- Ras Al Khaimah has a low tax and a low cost of living, compared to other emirates and countries, and it offers a high quality and a high standard of living, with new, modern, and luxurious properties and facilities.
- Ras Al Khaimah has a high demand and a high value for properties, especially for apartments in under-construction buildings, as they offer a high capital appreciation and a high rental income, and they are more affordable and flexible than completed properties.
Real Estate Group hopes that this article was useful and understandable for you and that you learned a lot from it. If you are looking to buy a luxury apartment in a residential complex under construction in Ras Al Khaimah in 2023, please contact us on WhatsApp and we will help you find the apartment that best suits your needs, preferences and budget.
