Dubai’s Foreign real estate investments achieved an all-time high in 2023. Over 1.6 million transactions exceeded AED 634 billion (USD 172.61), a 20% leap from the previous year. With a projected compound annual growth rate (CAGR) of 8.4% from 2024 to 2030, the market is expected to continue growing, making local real estate a worthy investment.
Regardless of the market’s upward trajectory, due diligence is always a must. It’s best to know what you’re getting into by getting as much information as possible about the listing. Property dossiers, fact sheets, brochures, photographs, site visits (or interactive virtual tours if you can’t visit in person) are immensely helpful.
Plus Render tells you all you need to know before finalizing a real estate deal in Dubai.
Can Foreigners Buy Property In Dubai?
To diversify its economy, the government of Dubai encourages foreign ownership. Expatriates can invest in real estate in designated freehold zones such as Downtown Dubai, Dubai Marina, and Palm Jumeirah.
You can also invest in a leasehold which is valid between 10 and 99 years. It’s a great option that offers limited liability for maintenance.
Why Do People Shy Away From Investing in Dubai’s Real Estate Market?
We unveil the truth about curiosities surrounding the real estate in Dubai:
Myth: The Market is Volatile
Volatility has been a constant companion of the Dubai real estate market. However, these short-term fluctuations are not a matter of concern. Most investors can expect the value of their investment to stay stable amid the tumultuous waves of high interest rates and inflation.
This tax-free jurisdiction shows resilience and strength, with a market expected to record a CAGR of around 8.4% between 2024 and 2030.
Myth: Properties Cost a Pretty Penny
Dubai’s real estate market ranked third in terms of fair value, beating prominent cities like London, New York, and Tokyo. It is competitively priced, with an average cost of $850 per square foot for luxury projects.
Hence, you don’t have to be a millionaire to invest in real estate here.
Myth: Personal Appearance is Mandatory
You can purchase a residential or commercial property in Dubai without visiting the Emirates.
The transaction can be done remotely, though we recommend executing an individual Power of Attorney so someone can make important decisions on your behalf. Your real estate broker can assume this responsibility and negotiate the terms of the sales contract to get you the best deal.
If your investment is more than AED 750,000 (approximately USD 204,200), you’ll be eligible for a visa. The visa lasts three years as long as you give a 50% downpayment of the property’s total value.
Myth: Foreigners Can Only Buy With Cash
Foreign investors interested in buying property in Dubai can obtain a mortgage to finance their purchase. Contrary to what’s believed, the process is fairly straightforward if you meet the eligibility criteria.
Here’s the minimum of what’s expected:
- You should be above 21 years of age.
- You’re a citizen of a country that’s on the bank’s list.
- You’re salaried or self-employed. Plus, you meet minimum income requirements (post-tax deductions).
Interest rates are slightly higher, but loan terms can be up to 25 years!
Myth: Cost of Living is High
Dubai is the epitome of luxury—and luxury comes with a hefty price tag.
Extravagant experiences, sprawling shopping centers, and state-of-the-art amenities encourage a lavish lifestyle. But that doesn’t mean you can’t live in the city on a budget. Choose an affordable neighborhood, watch your DEWA bill, and rely on free or low-cost entertainment, and you’ll be good to go.
6 Advantages of Having a Property in Dubai
Investing in real estate in Dubai is a good idea for the following reasons:
Booming Economy
Dubai achieved a 3.2% growth in the first quarter of 2024, one of the most notable upward trajectories recorded in real estate. Its strategic location, abundance of sun-kissed beaches, state-of-the-art amenities, and exceptional quality of life have led to the demand for upscale properties.
Attractive Return on Investment (ROI)
The United Arab Emirates received a perfect 10/10 score for having a “strong and stable economy.” It reduces the risks associated with capital investment, allowing investors to take home an average annual ROI of 6% to 10%.
Of course, factors like occupancy, location, type of property, and maintenance costs will ultimately determine your take-home profits.
Thriving Tourism Industry
Dubai is a leading global tourism destination. It welcomed 8.12 million overnight visitors from January to May 2024. That’s more than an 11% jump from the same period last year. It has created a strong demand for properties of all kinds, with the most dramatic spikes noted in hotspots like Dubai Marina and Palm Jumeirah.
High Rental Yields
Dubai offers relatively high rental yields, with ballpark figures ranging from 8.5% to 11%. The strong economy and political stability attract new residents and tourists, ensuring a strong demand for rental properties.
Top-Tier Safety
Dubai has a low—almost negligible—crime rate compared to major cities like London and New York. Zero tolerance policies, severe penalties, strict immigration laws, and CCTV surveillance create a secure environment.
With a safety index of 83.6, it is an excellent investment destination.
Favorable Tax Policies
The emirate does not levy annual property taxes. There are also no taxes on capital gains, gifts, and inheritance. Its favorable tax policies are attractive to individuals who are looking to pass down or preserve wealth.
However, there is a 5% VAT on commercial spaces.
What To Consider Before Buying Property in Dubai
Here are some factors to take into account before buying property in Dubai:
Objective
Why are you buying real estate in Dubai? Are you looking for a vacation home or a sound investment?
Having clear objectives will help you choose the right listing.
Location
Location plays a pivotal role in real estate success. Select a neighborhood that works well with your lifestyle. Your choice impacts your quality of life and the home’s market value.
Legalities
Property scams are a serious problem in Dubai, affecting more than 50% of survey respondents. Make sure you work with an approved real estate agent or broker.
They typically charge around 2% of the transaction price. But the extra expense is worth it since you can ensure compliance with the city’s rules and regulations while steering clear of unpleasant surprises.
In addition, look for listings with 3D renders. These high-quality technological assets give you an insider’s view of what the space looks like even if it hasn’t been built. Furthermore, you can request changes to ensure the property is exactly as you’d envisioned.
Budget
Constructing a house is costly in Dubai, with prices ranging between AED 350 (USD 95) and AED 700 (USD 190) per square foot. If you use premium materials, aesthetic lighting, and state-of-the-art HVAC systems, you may end up paying millions.
Create a budget before you start building to keep expenses under control.
Alternatively, you can invest in up-and-coming neighborhoods like Al Furjan, Dubai South, or Jumeirah Village Circle (JVC). They have more reasonable prices, with excellent potential for future growth.
Amenities
If you want to enjoy good ROI, offer amenities your tenants will enjoy. Choose safe, quiet, and accessible neighborhoods with facilities like gyms, parks, and basketball courts.
Then, seal the deal with energy-efficient smart home features.
Buildings in the Dubai Silicon Oasis, for example, can bring annual returns of over 9% because they’re maintained well. They have excellent electricity and water supply systems. Property owners also enjoy easy access to amenities like restaurants, pubs, schools, and hospitals.
Maintenance
Authorities go the extra mile to ensure that Dubai is the cleanest city in the world. Property owners are expected to pay an annual fee between $15 to $60 per square meter for maintenance. You should also factor in personal costs like housekeeping and appliance servicing.
Let Plus Render Help You Make an Informed Buying Decision
Investing in Dubai has excellent benefits. However, it comes with risks, especially if you’re transacting remotely.
Before sealing the deal, get as much information as possible. Ask for fact sheets, dossiers, and virtual tours so there are no unpleasant surprises down the road.
Ensure a smooth, secure, and satisfying purchase by knowing why you’re buying, carefully choosing a location, exploring the relevant legalities, and setting a budget. If you’re planning to lease your Dubai property, consider the amenities you’ll be offering and how you plan to maintain them.
By following our tips and working with reputable real estate brokers, you can enjoy all the advantages of Dubai’s prime real estate market.
