Dubai rental market investing

[Mo Fayaz]

Hi everyone, 

My first post here. Wanted some advice on rentals especially in dubai where the marketplace works differently.  

In Uae, capital appreciation is based on rental roi. If rents are up, prices are up and capital appreciation goes up.  But if rental rates are down, appreciation is negative.  This is unlike what I'm used to in canada/usa where capital appreciation is almost guaranteed on a yearly basis. 

There are no taxes so can't claim anything like in the states.

But one thing that's positive unlike Canada is that rental returns are pretty much anywhere from 5 to 10% net. 

I bought a studio appartment at 360k Aed(including all fees) to start building passive income based on videos I watched here.  Rented at 29k net(excluding all fees) so was getting 8.1%. This year the market went down due to oversupply which I suspect will continue till at least 3 years, now the apartment is valued at 260k and rents are down to 22k net. I'm at 6.1% rental roi but capital value down by 100k.

1.Should I worry about the capital or continue since my strategy is passive income? 

2. What advice you have for me given the market parameters. 

3. Market is down, so should I consider buying another unit on a 4 year loan at 7.2%? Mortgages are not possible on properties under 500k, so personal loan is only avenue for me. 

Any questions let me know! 

Thanks all.