Dubai has become one of the world’s preferred destinations for international real estate investors. Recently, the emirate has witnessed a substantial increase in the demand for residential properties, stimulating significant new development projects. Apart from the Expo 2020 and economic stability, the new residency reforms have also facilitated more interest in Dubai’s real estate market.
The second quarter of 2022 hit an all-time high for quarterly sales in the history of the real estate market in Dubai totaling 25,000 transactions marking an increase of 10% QoQ and 45% YoY. The sales value has also witnessed an 87% YoY increase in the first half of 2022, with around AED 115 billion worth of transactions. Furthermore, August was the highest performing month in the last 14 years, as the market has recorded AED 24.3 billion investment through 9,720 sale transactions. Indians emerged as the biggest investors in the real estate market in Dubai, followed by UK nationals, Italians, Russians, and French.
2022 has also witnessed some of the largest properties’ transactions ever made in the country’s history. A villa in Palm Jumeirah currently holds the record for the most expensive villa sold in Dubai, with AED 302 million worth. Moreover, the largest penthouse at Atlantis, the Royal Residences on the Palm Jumeirah, has sold for AED 163 million in what is one of the highest-valued property off-plan transactions of the year so far in the city. This year has also witnessed the sale of the most expensive townhouse ever sold in Dubai, located in Jumeirah Bay Island, with about AED 35.5 million.
Growth Drivers:
The factors which make Dubai’s real estate market attractive for international investors are as follows:
City of Innovation
Dubai is a major technology and business growth hub, constantly evolving to foster an innovation ecosystem. The emirate is a world leader for AI, robotics, and fintech in the region, providing support and manufacturing hubs for innovative companies.
There are also constant developments that attract international investors to Dubai, taking into consideration the environmental, economic, and social sustainability with a future-forward vision. Dubai also aims to make every element of life in the city hassle-free with its smart city project. Therefore, investing in Dubai comes with great benefits as there is always something new and exciting.
Fast-Paced Economy
Buying a property in Dubai gives the opportunity to benefit from the emirate’s booming economy. Dubai, as the strategic midpoint between the East and West, serves as a main regional hub for expanding businesses in either, or both, directions. This stable economy, with revenue generated from tourism to trading, is attracting foreign investors more than ever. Dubai has become the largest business hub in the Middle East as its economy has improved across all sectors and witnessed incredible capital growth.
Tax-Free Investment
One of the main reasons why Dubai is the best city to invest in real estate is the absence of property tax. This makes properties in Dubai highly affordable and lucrative compared to other major cities, where it is mandatory to pay periodic taxes. Though VAT has recently been implemented, the residential real estate market has not been affected.
Guaranteed High ROI
Dubai’s real estate market offers a high return on investment (ROI), substantially greater than those offered in its counterpart cities such as New York and London. As a result of the lack of property taxes, investing in Dubai’s real estate could potentially generate a high return on investment. In Dubai, you can expect returns of 5-8%, depending on whether you are investing in a villa or apartment. In addition, property prices in Dubai are rising, generating a significant gain for investors.
Lower Property prices per square meter
The property prices per square meter in Dubai are far lower compared to other international cities. The price per square meter of an apartment in city center in Dubai is $3,770 compared to Hong Kong ($31,748), New York ($16,153), London ($14,678), Geneva ($14,476), Paris ($12,057), and Tokyo ($8,671). Dubai also has one of the highest rental yields in the world (5-8%) compared to large cities like New York (2.9%) London (2.7%), Singapore (2.5%), and Hong Kong (2.4%). Hence, Dubai is expected to attract international investors into its real estate market.
Investor-friendly Regulations
Recently, UAE has introduced several incentives for investors. An investor may qualify for a 2-year resident visa in Dubai for only AED 1 million investment. A golden visa, which is a 10-year renewable visa, is also given to investors who made a cumulative investment of AED 2 million. Non-UAE citizens are also allowed to have a 100% full ownership on properties in Dubai, which has attracted more foreign investors into the city’s real estate market.
Safety and Security
Dubai is one of the safest cities in the world as it has a very low crime rate and efficient legal system, attracting more investors to the emirate.
In terms of real estate investment, there’s a strong regulatory framework aimed at protecting investors’ interests in Dubai. Dubai is also the most transparent and regulated property market in all of the MENA region.
High Quality of Life
Thanks to the outstanding life standard and great infrastructure, Dubai is one of the best cities for investments. It has been recognized as a haven for investors with its luxurious lifestyle, connectivity, state-of-the-art entertainment, and recreational facilities.
In terms of the emirate’s real estate market, various developers have a growing inventory, offering spectacular properties, increasing in upcoming and desirable areas. It is also relatively affordable compared to other major cities, which means there is always something for everyone based on their budget.
Outlook
Dubai has evolved into a global metropolis replete with investment opportunities, innovative planning, impressive infrastructure, and sustainable living. People investing in Dubai property can be self-assured that they are on the correct track as the market has rebounded strongly and looking promising.
