Dubai has gained a strong reputation as a perfect location to invest in real estate after a host of factors have come together to create the ideal conditions.
While many investors from all over the world are looking to get a property in Dubai, this serves to perpetuate its advantages while also creating the scarcity that drives prices up – a win-win situation for savvy investors.
But you might wonder why Dubai has gained this reputation – and as I’ve spent my career in property – I hope I’m in a good position to explain.
Firstly, Dubai is now a renowned trade hub, attracting investors, entrepreneurs and businesses from all over the globe. Naturally, this has increased the demand for real estate.
I’d say the local economy has proved its strength, especially against the unfavourable headwinds of the last few years. While many global economies are struggling, Dubai looks set for growth again in 2023, even in this era of post-pandemic recovery.
Which brings me to another very valid point – the pandemic. Dubai’s strong approach to dealing with the pandemic – from its public sterilisation programme to the swift vaccination rollout – impressed many. I believe our city has since been viewed as somewhere safe, pragmatic and able to rapidly deal with urgent crises like COVID-19. Our success in containing the virus only served to help investors view the city – and the UAE – as a safe, rational place to invest. Not only that, but policies put in place to help bolster the economy in the tough times following the pandemic have seen the economy buck global trends and continue a positive growth strategy while other nations are struggling with debt, unemployment and other issues.
And post-pandemic, as many nations continue to restrict travel and immigration, Dubai has, if anything, opened up more. While there has been a noticeable influx of Russian investors over the last 12 months for obvious reasons, what’s less obvious is the rising number of High-Net-Worth Individuals – HNWIs – coming to the city from all over the world.
They’re drawn by competitive property rates, the luxury development which comes as standard, alongside high-quality materials and build, topped by the ease with which investors can gain visas.
Through a series of well-crafted policies, the government has made Dubai an easy, straightforward and enjoyable place to live and invest. Of course, the tax-free environment is most certainly a pull for foreign investors. No income or property tax means investments go even further, especially when factoring in the competitive pricing we see in the emirate.
As Knight Frank’s Faisal Durrani puts it: “Adding to the city’s appeal is its relative ‘affordability’, with prime homes transacting for around US$800 per square foot, making Dubai one of the most ‘affordable’ luxury residential markets in the world.”
Knight Frank’s figures suggest prices will rise this year, especially in the luxury or prime sector, where limited stock is stoking price hikes.
The same applies to the rental market. As more and more people are attracted to living in Dubai post-pandemic, we will see rising rental prices across the board. Of course, while this is good for investors, rising rental rates also generally encourage consumer spending and lead to higher economic growth. Let’s not forget the growing numbers of business and tourist visitors, all of whom need temporary accommodation while visiting – an excellent sector for investment.
Dubai’s rental market offers high rental yields, among the highest globally. A Bayut report suggests average rental yield for Dubai apartments ranges from 6% to 8%. Meanwhile, Dubai Land Department suggests real estate in Dubai offers an average yearly return on investment of 5% to 8.4% – competitive when compared to cities like New York, London and Singapore.
Our city is safe and politically stable. Low crime rates and a secure environment make it a safe haven for investors. And the emirate has a legal system that protects investors’ rights.
Finally, Dubai government initiatives to attract foreign investment into real estate, including the ‘Golden Visa’ program – which gives long-term residency visas to property investors – are also contributing to market growth.
In short, there is a myriad of benefits to investing in Dubai property – so what are you waiting for?
