Concluding 2023 on a high note, Dubai’s real estate market has achieved its highest residential capital gains — or profit realized from the sale of a property — in a decade. Earlier in June, a staggering $1.3 billion worth of sale and mortgage transactions were made in the city within just a single day. So, if you’re looking for real estate investment in Dubai, now is a prime time.
Why invest in Dubai real estate?
Put simply, Dubai offers promising lucrative opportunities in terms of real estate investment. This boom can be traced back to the Freehold Law of 2002. Revolutionizing property ownership rules, the landmark legislation allowed non-UAE citizens to engage freely in buying, selling, leasing and renting properties.
Today, Dubai’s appeal as an investment destination is far from waning. A strategic geographical location, ambitious infrastructural projects, world-class amenities and reputation as a tax haven are key factors that attract investors locally and globally. And with the continuous influx of expatriates and tourists, there’s a steady demand for both residential and commercial properties.
In the broader UAE, you can qualify for a 2-year residence visa if you invest in ready property. If you want a longer residence, a 10-year Golden Visa is available if you’re investing a minimum of AED2 million on a brand new or previously owned property.
Dubai’s real estate landscape
There are different types of properties you can invest in. There are apartments, villas, townhouses and commercial ones. There are also those that are already finished and are still under construction.
According to data powered by DXB Interact and the Dubai Land Department, apartments are the most popular in the local real estate market. In the fourth quarter (Q4) of 2023, 25,971 apartments were sold, followed by villas (6,660) and commercial properties (1,121).
Regarding property prices, off-plan apartments lead with an average of AED1,814 per square foot. Ready apartments follow at AED1,197, then off-plan villas at AED1,146.
How well your investment performs also depends on where the real estate is located. In Q4 2023, the top-performing areas in terms of value are Palm Jabal Ali, Dubai Marina, Business Bay, Downtown Dubai and Palm Jumeirah. If by volume, the top 5 will be Jumeirah Village Circle, Al Merkadh, Business Bay, Dubai Marina and Dubai Hills Estates.
How to make a real estate investment in Dubai
Dreaming of starting your investment journey in Dubai’s thriving real estate landscape? Here’s how.
Step 1: Research thoroughly
Begin with comprehensive market research to understand the current trends, prices and future growth prospects. To start with, it’s ideal to focus on areas with high demand. As mentioned above, these include Downtown Dubai, Palm Jumeirah, Dubai Marina, Dubai Hills Estate and Jumeirah Village Circle.
Also, identify which type of property you’ll purchase and whether you’re opting for an off-plan, a ready one or even a secondary market property. Resale properties are easier to acquire and less costly upfront but will need some repairs and renovations. Meanwhile, new properties are more in tune with modern trends. Typically, off-plan properties have the lowest price but the construction period is longer.
Step 2: Consider financial implications
As with any other investment, you must honestly assess your financial capacity — now and in the future. Weigh it along with your near- and long-term financial goals. Consider the initial investment cost, potential yields, service charges, related fees and maintenance expenses. In Dubai, note that there is a 4 percent transfer fee (also known as a transfer tax) payable to the Dubai Land Department.
Keep in mind that even if Dubai has no income and capital gains taxes, you must account for all possible expenses to calculate your net investment return more accurately.
Step 3: Reach out to reputable professionals
Especially if you’re a foreigner, making a real estate investment in Dubai can be complicated. This is why it pays to collaborate with real estate agents licensed by the Real Estate Regulatory Agency (RERA). These professionals can help you choose the most suitable properties based on your unique needs, preferences and capacity. They can also aid you throughout the investment process.
Seeking assistance from legal advisors is also essential. This ensures compliance with local laws and regulations, thereby safeguarding your investment.
Step 4: Proceed with the transaction and register your ownership
If you’ve set your sights on a particular property, you and the seller must sign a sale and purchase agreement. This document identifies essential information, such as the address, size and cost of the property. It also contains the deal’s terms and conditions, among others. If you’re buying real estate with a mortgage or if the property is on the secondary market, you must also obtain a No Objection Certificate.
Apart from these documents, you must also prepare your passport, current residence visa or permit and a Power of Attorney if you’re an agent or representative is transacting on your behalf.
Once you settled your financial obligations with the seller and both parties already signed the contract, you must register your deal with the Dubai Land Department. You can visit the office or do it online via the RERA app.
Tips when investing in real estate in Dubai
For a smoother real estate investment experience, follow these tips.
- Define your purpose. Whenever investing in something, you must set your objectives early on. Are you looking for quick returns through short-term rentals? Or are you aiming for long-term capital growth? Note that your goals will guide your strategy — from property selection to financial planning.
- Stay informed. Market trends come and go. New regulations also emerge every now and then. So, the key is to keep abreast of the latest developments, specifically in Dubai’s and the UAE’s real estate market.
- Diversify your portfolio. Want to minimize risks? Make sure to diversify your investments — don’t put all your money into your real estate investment. And, just the same, when leveling up your investment in real estate, you must spread your investment across different property types and locations. Consider a mix of residential and commercial properties, ready-to-move and off-plan projects to balance your portfolio’s risk and return.
Embarking on a real estate investment in Dubai can be substantially rewarding, thanks to its growing market. However, remember that patience is crucial to seeing a good return on your investment. Investing in real estate is a long-term game. The key is to stay focused, keep up with market trends and be flexible with your strategy.
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