Investor’s Guide to Dubai Real Estate 1.0 – Here is Everything You Need to Know
Dubai real estate investment guide aims to educated potential investors on Dubai’s flourishing real estate market and to explain the current market situation, when is the best time to invest in Dubai & what are the key points you should be looking at before considering investing.
Whether you are an end-use or an investor, Dubai’s real estate market has always been one of the most profitable & safer option to gain higher ROI & secure a profitable long-term investment.
What Makes Dubai So Attractive?
It is a city where early investors have enjoyed the highest level of growth the global property market has ever seen. Since 2002, when the right of property ownership to foreign nationals was announced, property investors from all over the globe have watched their investment deliver strong returns.
Today the market has matured and is no longer based on speculation, a strong regulated & sustainable property market that has serious benefits when compared to other global property markets.
Benefits of Investing in Dubai:
– Tax-Free Investment
– Growing & Stable Economy
– Outstanding Infrastructure
– Variety of Option for All Budgets
– High Rental Returns (Average 6% – 7%)
– Great Location Where East Meets West
– Expo 2021
– Global Business Hub
– The City’s Extraordinary Vision
Global Cities Compared
Dubai’s property market might be much younger than other global real estate hot spots. However, the city profits better average ROI than most metro cities in the world. A recent study by the international rating agency Moody’s Investors Service revealed that the demand for housing in Dubai should continue to grow with an atractive ROI of 6% to 7%, as recorded in the last 12 months
| City | Average ROI |
| Dubai | 7% |
| Montreal | 5% |
| Bangkok | 4.5% |
| Paris | 3.0% |
| New York | 2.9% |
| London | 2.7% |
| Singapore | 2.5% |
| Hong Kong | 2.4% |
| *Data by Moody’s Investors Service |
Moreover, the city is well-known for providing an excellent value for money & even a better potential for capital growth.
| City | Prime Residential Value $ Per Square Foot |
| Dubai | $580 |
| Singapore | $1,580 |
| London | $1,920 |
| Paris | $1,590 |
| New York | $2,510 |
| Hong Kong | $ 4,610 |
| *Data from Savills Prime Index – Feb 2020 |
Brief History of Dubai’s Property Market
It would be fair to say that Dubai’s property market started in 2002 when HRH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai declared freehold rights for owning property for non-nationals.
At the peak of Dubai’s property boom in 2007 RERA (Real Estate Regulatory Authority) was formed which brought various Rules and Regulations that streamlined transactions and registrations of ownership for land/property in Dubai.
Oqood was also launched in 2008 after law 13 was imposed which laid out a number of responsibilities for the Developer to adhere to and pathed the way for off-plan registrations (Oqood).
By the end of 2008 Dubai’s property market faced its biggest challenge, the global economy crisis hit Dubai’s market & properties saw a significant drop in just 12 months, buyers who where smart enough to invest then saw a huge return on their assets.
2013 & 2014 were prosperous years for both the economy and real estate market with strong population growth. Many new developments were launched with prices appreciating quickly. As confidence grew in the region, businesses flourished and more multinational companies started seeing Dubai as such a good central hub.The market grew from then steadily with minor fluctuations & without any major setbacks.
The Real Estate Market Post Covid-19
It’s really too early to predict the extent of the global economic fallout from the current crisis, but we can very much say that prices today are at the bottom, or at least very close to it.
The coming months will present an opportunity for buyers with a long-term plans, expats who’ve made Dubai there home, local Emiratis or investors seeking high rental returns; they all are eager to benefit from another year full of offers before Dubai Expo 2021, in which economist predict prices will increase as Expo 2021 launch date gets closer.
Furthermore, today the current interest rates are very attractive and mortgages are made more accessible to first-time buyers, expatriates purchasing their first home can now finance up to 80% of their property price. Once the effects of the Coronavirus slow down and the restrictions are eased, we expect Dubai’s real estate market to face a buyer’s boom as stakeholders will seek to capitalize on factors such as low interest rates and lower down payments.
Dubai Resets The Clock For Expo 2021
The well anticipated global mega event will now run from October 2021 to March 2022, this is after a two-thirds majority of Bureau International des Expositions (BIE) Member States voted in favour of postponing the next World Expo by one year, a delay that allows all participants to safely navigate the impact of COVID-19, and allows the World Expo to focus on a collective desire for new thinking to identify solutions to some of the greatest challenges of our time.
The delay of Expo event means we can enjoy more time to ensure Dubai is ready and the infrastructure is in place to accommodate the event & the 25 million anticipated attendees over the 6 months period. This event is likely to bring a surge in global investments into Dubai with over 300,000 new jobs created, this event will also be special as it is predicted to be the first mega event after the current pandemic giving opportunity for multiple businesses from around the globe to meet. Not to mention all the benefits to the real estate sector & surge in property prices.
But the question remains, when to buy?
It’s the million-dollar question that everyone wishes there was a clear answer to, the fact is no one can predict the future the same way no one predicted today’s Covid-19 pandemic. Brokers will always promise that today is the perfect time to buy, well the truth is its all about finding the right project at the best offer regardless of the time duration. Often buyers want to wait until the prices reach the bottom, but the truth is we will never really know the bottom of a market until prices start going back up and usually by then you have already missed the opportunity and its too late. If we look at the fundamentals & economic evidence, now might be a great time to buy to invest in Dubai’s property market as the city is in a strong position for growth in the coming 5 years. The current global pandemic only makes the opportunity for getting a better bargain in resale market or perhaps a better payment plan & waivers directly from the developer.
What to buy?
Before discussing what property to buy, it is very important to understand the purpose behind your purchase. It makes all the difference if you are looking for a family home as an end user oppose to a purely investment property, it is a logical decision and shouldn’t be affected by emotion. With that being said if you are looking for a property as an end user, many of the factors affecting your choice will be personal, such as property proximity from your work location & children’s school,do you prefer living in a villa community or an apartment and so on. Here our team’s goal is to help you find something that suits your specification and fit your desired budget.
On the other hand, if you are looking for purely investment then the game changes, and much comes down to location which we can all agree on. What makes Dubai special in this regard is that the city is continuously growing with new mega communities in prime locations being build almost every year, and investing in one of these new projects at an early stage means that you are getting in at a much lower cost which almost guarantees good returns. Such new communities also offer better payment plans with DLD & service charge discounts. Another key point which is often overlooked at is considering your resale plan whether that is 5 years from now or 20 years, it is important to study the project quality, location and amenities to see if the project will be relevant and still hot few years from now. Deciding on which developer to buy from is also very important & definitely runs hand in hand with the location, a choice you should make after studying the developer & asking your realtor for previous study cases & projects.
Conclusion
Before the Covid-19 pandemic started in 2019, Dubai was the second most visited city in front of the likes of Paris, London and Singapore despite the city’s small size. A huge global interest from both tourists and investors, not to mention the spike in interest from expats living in the country after the investors visa initiative has been launched. The city still provides luxury developments at the fraction of the prices in other global cities, & one of the highest returns on investments. Add to that you don’t have to pay any rental income tax and when it comes to selling your property you don’t pay any capital gains tax, this will reflect on your returns definitely.
We’ve seen how Dubai has grown in the last 20 years, it will be interesting to see what happens over the next 30 years. As a property investor, the speed and scale of Dubai’s development should motivate you to add a slice of this pie to your portfolio.
If you are interested in learning more about the unique opportunities available in today’s market, feel free to get in touch with one of our real estate experts to get a free real estate consultation.