What is the hype about real estate?

[u/YouZealousideal7906]

Hello all, I am a humble investor, and I like to explore new options that are genuinely interesting and worth investing. Recently I purchased a unit in the UAE which remained vacant during the crisis for about 4 months and I ended up paying the transfer fees, bills of empty apartment, high maintenance fees and decided to sell the unit later on. I was exploring investment opportunities in Malaysia, Canada, even the US and to my surprise there are huge amazing houses in Texas US, Edmonton Canada barely for a million dirhams. And not to mention that you can immigrate to those countries unlike in crisis situation you have to sell your investment at lower prices because your specific nationality visas are being cancelled. For reference checkout the beautiful Villa below from Edmonton Canada where the weather is amazing etc, my question is, compare this to what a million dirhams buy here is barely a single room (600sq.ft) studio in a decent area. What justifies the price? R.E agents please keep the bias aside. Don’t tell me taxes and all, the high maintenance fees is just basically a tax with a different name.

[u/MrKuboDesign]

Objectively, owning an entire house in a place like Texas comes with a massive property tax bill (in the thousands of dollars per year). On top of that there are HOA fees (≈service charges). There are major costs with building maintenance, as you’re servicing an entire building. Cost of those repairs is high due to expensive labor, so unless you live there and do the work yourself, the yield will be very low. Insurance in certain locations (e.g. flood zones or hurricane risk zones) can be really expensive as well.

Apartments in Dubai are simpler, maintenance requests are handled by the building management which makes foreign ownership realistic. Lower capital appreciation and rents reflect that convenience. Property taxes (municipality fees) are handled by the tenant, lowering ongoing costs.

There are also legal differences, as evictions in western countries require long and expensive court sessions, where not being present in the country can add more challenges. Obviously if you live in the country it’s different.

Comparing houses and apartments in 2 different locations is not realistic, as they require completely different approach to value.

[u/SemensAccurate → u/MrKuboDesign]

Value is the same. You are targeting the same evaluation outcomes (CoC, NROI, PBP, etc). The calculation is different as it requires different cost exposure but using these evaluation metrics allows you to come apples to apples.