Property Investment: Dubai, to buy, or not to buy?

The volatility of the Dubai real estate market is common knowledge and a consistent point of discussion. With many ex-pats now considering Dubai a long-term home, rather than the old “make money and leave” attitude of the 90s and 00s, foreign ownership is becoming more commonplace.

Dubai now attracts significant investment from foreign non-residents due to the healthy yields on UAE properties. Reuters recently reported that Dubai’s residential real estate market is on a steady trajectory, with prices expected to rise modestly in the next few years. This leads us to discuss the often-asked question: why should you consider buying in Dubai?

Accessibility

In Dubai, foreign ownership is allowed in areas designated as freeholds. Non-resident foreigners and expatriate residents can acquire freehold ownership of property without restriction, usufruct rights or leasehold rights for up to 99 years.

In 2002, the Dubai Government passed laws that allowed foreigners to own freehold properties in Dubai, which proved to be a turning point for the city and country’s real estate market. Due to the diverse selection of properties, healthy ROI and regulated markets, there has been steady demand from foreigners interested in buying properties in Dubai, including non-residents.

Foreign and non-resident investors can buy property in Dubai on a freehold basis, allowing foreign citizens to buy, sell or lease their property. However, bear in mind that the purchase of property in Dubai as foreigners on a freehold basis is only permitted in designated zones, as outlined by the government.

Zero property taxes

One of the most attractive aspects used by property investors is the zero tax policy. Whether you generate high returns on your investments from rental income or the value of your property has increased significantly over time, there is no tax at any time when you own a property in Dubai. Income tax, capital gains, council tax, and inheritance tax are all non-existent.

Interest-free payment plans, post-handover payment plans, zero commissions, and financing options are among the other reasons why buying in Dubai is a favourable strategy.

Safety and quality of living

Dubai is known for attracting talent from all over the world and is home to several multinational Fortune 500 companies that have found a strategic location to serve markets in the Middle East, Africa, and India. Despite the huge tourism boom, Dubai remains one of the safest cities in the world [1].

The city recently won several awards highlighting its outstanding security levels, even ranking number one worldwide for personal safety for women [2].

With the wonderful weather, the beach at your doorstep, access to impressive shopping, countless events, cultural exploration, and its wide selection of restaurants and entertainment, you can understand why living in Dubai is desirable for many.

Tourism

Dubai is one of the most popular tourist and business destinations in the world and offers world-class attractions and an enviable multicultural lifestyle that is unmatched in any other part of the world. With the region’s world-famous skylines and premium locations such as Palm Jumeirah, Dubai Marina and Downtown Dubai, there are many exciting places to visit.

Following the fundamental shift in the vacation industry and the growing market share of AirBnB, purchasing a short-term rental property in Dubai can be highly lucrative. By listing your property in the world’s largest hotel chain (by room count), you can expect high annual returns of up to 10-15% during the peak season in Dubai (October to March).  As such, holiday homes are becoming one of the most popular types of real estate investments in Dubai.

Low prices and high rental yields

Owning a property in Dubai is more affordable than people expect. The table below shows how ownership and rental of a property in Dubai compare to London, UK [3].

Recent Business Insider studies show the UAE ranks second as one of the best countries to earn passive income and benefit from high rental rates, with annual returns significantly higher than many other major cities in the world [4].

The UAE also ranks 42nd on the list of the most expensive countries per square foot, compared to 16th place in the UK, 15th place in France and 30th place in the US [5].

2021 Real Estate Market and Economy

Dubai is still considered a developing city, and this evolving development into one of the largest cities in the world is driven by its status as one of the most important business hubs in the Middle East. The government’s focus on transparency and sustainability in real estate, boosting economic activity by supporting stimulus packages, and continuing to improve the longevity of residency for foreign expatriates, has led to an impressive 2021 for the region, which will continue into 2022 and beyond.

Dubai recorded nearly 40,000 sales transactions worth 88.12 billion ($23.99 billion) in 8 months this year, an increase of 22.6% compared to last year. Property prices have steadily increased, an average of 4.4% this year, with the highest annual growth since 2015.

Rising demand for property and high market trends have emerged from the above factors and the way Dubai handles geopolitical issues in conjunction with the pandemic. How the UAE government and Dubai dealt with the pandemic has led to an influx of new residents from many countries worldwide because they feel safe and impressed by Dubai’s response.

Summary

Dubai’s real estate is undoubtedly an impressive phenomenon.  The city has so much to offer, as its growth and popularity show no sign of slowing down. Dubai has everything for any investor: villas on the golf course, holiday homes for your family to enjoy, or hotel apartments with guaranteed returns. Now is an excellent time to consider the region an alternative source of income or maybe even your new home.