The potential of real estate investment in Dubai

Being the most developed transport hub, as well as business and commercial center of the Middle East, Dubai has various investment options to offer. One of them is the city’s property market.

Real estate investment in Dubai attracts thousands of local and international buyers for a number of reasons:

  • relatively low property prices in comparison to other megalopolises;
  • rental yields higher than on most popular European or North-American markets;
  • preferential tax treatment;
  • legislation protecting foreign investors’ rights;
  • world renowned developers;
  • high demand for different property types including residential, office, trade, hotel real estate, etc.

Residential real estate in Dubai

Of course, most people buy real estate in Dubai for themselves. The city’s population is quickly growing, so the demand for apartments is high, and one of the options here is to invest in projects under construction in order to resell them later.

Another option is to capitalize on the emirate’s strong inflow of expats. About 80% of Dubai’s population is foreigners working here temporarily. Most of them don’t want to buy property and prefer renting instead. As a result, the average rental yields in the city equal 7-8% a year, which is considerably higher than in London, New York or Tokyo.

But one should keep in mind that renting out an apartment or a townhouse from abroad may case troubles.

Trade and office space

Another field to capitalize on due to high demand is Dubai’s office and trade real estate. In comparison to Q3 2017 the rental performance of the city’s prime office segment rose by 1.5% in 2018.

In spring the UAE’s government made a decision to allow 100% foreign ownership of new companies outside of Dubai’s free zones as well as to grant foreign entrepreneurs 10-year residency visas. This decision is expected to boost the city’s business sector and its commercial property market.

In addition, trade and office real estate can be handled to asset management companies which is useful for investors living outside of the UAE.

Hotel investments

Another popular option for real estate investment in Dubai is its hotel property. In 2017 the emirate was visited by almost 16 million tourists who stayed in local hotels, and by 2020 this number is expected to reach 20 million. The city offers a wide range of tourist attractions, developed infrastructure, mild climate and high quality hotels. As a result, Dubai has become the most popular destination for families and the fourth most visited city in the world.

In order to capitalize on this growth, one can invest in a hotel room in one of the city’s operating projects or those under construction. This option is a preferred choice if investors who don’t want to manage the property on their own. Instead, the hotel is managed by an operator from among a number of well-known companies.

These are the most popular property investment options in Dubai. Today the market is considered mature and safe and stands out from other popular destinations offering high rental yields and safety for investors from around the world.