Expanding an investment portfolio to include the global market allows investors to take advantage of emerging markets and untapped investment opportunities. Although Dubai’s real estate market is far from untapped, it remains one of the most underestimated investment opportunities in the world. Here are 10 reasons why seasoned investors choose to invest in Dubai.
Stable Economic Growth
The UAE, outside of the GFC years, has shown considerable economic growth, year after year. Despite a definite blow by the GFC, Dubai has evidently recovered extremely well, reporting stable and consistent GDP growth since 2009. By cutting its dependency on oil early this decade, the UAE has become one of the fastest growing economies in the world. Because of this proven stability, property investors keep returning to invest in Dubai.
Consistent Population Growth
Dubai has impressed the world with its man-made islands and towers that rise to the clouds. The allure of Dubai is something that smart investors see clearly and capitalize on. It is an intangible benefit that comes with every Dubai investment. As millions of expats flock to live and work in Dubai, the demand for residential dwellings increases. At a minimum, freehold Dubai sees 90-95% occupancy rates throughout the year.
Cutting Edge Development and Innovation
Government initiatives to make Dubai the greenest city in the world, consistent technological advances, a booming web startup scene and an advanced public transportation system gives investors reassurance that Dubai is a city that’s planning for the future. Smart investors need to know that their investments will generate high returns in the long-term, as well as the short term. With Dubai evolving in a sustainable direction, investors are feeling more secure when buying property in Dubai.
Safety and Security
Dubai thrives as a safe society, governed by laws that apply to all residents. Low crime rates and an unbelievable sense of safety keep expats coming to Dubai to escape corruption and crime in their home countries. There are also strict laws in place that protect property owners who choose to invest in Dubai, in the case of tenant-owner disputes, adding another layer of security for Dubai property owners.
Invest in Dubai and Get a Residency Visa
Purchasing a property in Dubai with a value of over AED 1 million entitles you to live in the UAE as a resident on an investor visa. The investor visa is valid for 2 years and is renewable. If you do not wish to acquire a 2 year visa you may request a 6 month multiple-entry visa.
Within freehold and leasehold ownership, foreign investors may be eligible to purchase residential property (ready or off-plan), commercial property and land. Within the residential sector, investors may choose from a variety of villas, apartments, hotel apartments and townhouses. In the commercial sector investors are able to choose from offices, labour camps and industrial properties. Each option has its benefits and it depends on the needs of the investor as to which route he chooses to take.
Low Entry Point
The average price per square foot in Dubai is USD 468, making it easy for investors to enter the market, without raising too much capital. Compare that to cities like London where for the same property the price averages at USD 3,208 per square foot. The difference is significant, and is even more-so when one considers the fact that there is no tax in the UAE and average rental returns are almost always higher.
Higher Rental Returns
Rental yields are common at up to 10%. The rate averages at about 7.31% and bottoms out at around 5.5%. Even at the lower end the rental returns in Dubai are some of the highest in the world. Compare the rates with other popular investment cities around the world.
For a Property Valued at $ 1,000,000
|City||Avg. Rental Return (%)||Rental Income|
|New York||3.91||$ 39,100|
|Hong Kong||2.82||$ 28,200|
Higher Capital Gains
It is not uncommon to see capital appreciation of over 100% over the course of 10 years. To maximize capital gains, smart investors buy into projects early. The ideal time to buy is at a project launch or during early construction phases. The closer the project is to completion, the less potential there is to maximize gains. It is advisable that investors find an easy payment schedule that allows them to invest the minimum amount before handover, as they will not be generating rental yields prior to that point.
No Tax on Property
Smart investors will avoid paying taxes, if they can. Due to the UAE capitalizing on natural resources, the government does not need to tax its residents to generate income. Compare this to popular investment cities around the world and you’ll see why investors invest in Dubai.
For a Property Valued at $ 1,000,000
|City||Tax Rate (%)||Tax|
|New York||2.22||$ 22,200|
|Hong Kong||15||$ 150,000|
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