When it is about making the right decisions regarding real estate/property, a wise investor is never blind in his decisions.
There are several parameters that he/she has to take care of before he dives into buying a property.
One key metric of the value of your property is the vacancy rate. It is a complete guide on how the vacancy rate serves the investors to make a better choice.
Definition and Example of Vacancy Rate in Real Estate
Well, it’s a simple metric used to figure out how many units are available in a particular apartment complex or across town. Real estate investors show their keen interest when they have to decide about making a lucrative investment in real estate.
So, what is the average vacancy rate for a particular city? It is very important when an appraiser is looking at a property to see what could be the potential value of that property in the future.
When it is about making wise real estate investments, appraisers will not just look at the value of a property. They’ll also look at indicators outside of that property, as the vacancy rate.
How Does Vacancy Rate Help the Real Estate Investors Optimize their Decisions?
Let’s get to know how the vacancy rate helps the investors make better decisions. If the vacancy rate is zero in a particular town or a particular building, then that probably means the landlord is charging very low rents on their property.
It is high time to increase the rent. But, it’s not the case with every property all the time. Even though, it is also a good indicator that every unit is occupied.
In the future, if you have to make money by renting out your property, a property with a low vacancy rate could be the best choice to own right now.
That’s not the only case, you have to look into. Before diving into a purchase, you must calculate the ROI of the property that will obviously optimize your decision about a lucrative investment.
You are going to have a variable vacancy rate from time to time in any rental property that you own.
The object, though, is to really mitigate that vacancy rate, trying to keep it down as low as possible. The property owners are often advised to keep the vacancy rate at 4 to 5%.
So what goes into figuring out a vacancy rate? Well, it’s simply the ratio number of units that are vacant to the total number of units available over there.
An investor planning to optimize his/her investment choices must look into the vacancy rate of a particular opportunity.
For instance, it is a shopping mall where you are going to avail yourself of a shop. You must know about the vacancy rate as per the above-given formula.
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Case Study of Dubai- Is it a lucrative Investment Opportunity?
With the knowledge gained through the above-given guide, we will look into different real estate parameters in Dubai.
Might be there are houses for sale in Dubai, and you have to make the decision either it would be an opportunity to grab or not. Obviously, the case study driven through multiple stats would help you out.
The occupancy Rate works contrary to the vacancy rate. It typically calculates the number of occupied properties in a particular area.
When it is about the occupancy rate of hotels in Dubai, it stands second to China where occupancy rate touches to 54.7% second to China as 58%.
It is one of the indicators that could appease the investors who want to make investments in the hotel sector of Dubai. See More
When it is about the commercial properties in Dubai, the stats also tell that it is a worth-investment place for global investors.
Statista, one of the most popular websites regarding stats and figure tells that the vacancy rate of offices in the Emirates of Dubai falls to 8% in 2019 with a 30% vacancy rate in 2012. The stats tell the growing demand for commercial occupancies in Dubai.
We have looked into two different kinds of properties e.g. hotels and commercial properties. Investors are more often interested in such kinds of properties that’s why we have chosen these properties.
The residential spots are also promising with an adjustable vacancy rate and other key metrics of real estate.
Conclusion
The guide makes you sense about the occupancy and vacancy rate and how they impact the investors while choosing the properties to invest in.
With an in-depth analysis of vacancy rates in Dubai, Dubai stands out in terms of a promising opportunity for investors.
