A Beginner's Guide to investing in Dubai Property

In: Blog
By: Praveen Kumar
Date: November 26, 2018
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A Beginner’s Guide to investing in Dubai Property

As a market that offers several strong fundamentals, an array of choices in budgets and features, as well as a highly receptive and encouraging regulatory environment, the Dubai property sector constitutes a great investment opportunity. Due to its location in between the east and west, Dubai International Airport continues to be the most used airport in the world, with over 80 million people arriving each year to experience the city’s unmatched tourist attractions or drawn by its status as a global hub for business and finance.

Already a cosmopolitan and highly regarded metropolis, Dubai’s confident strides into a technology and services enabled future are adding further positives to the prospect of investing in property in Dubai. A great standard of living, access to modern amenities and conveniences, a proactive integration with the global economy and the easing of regulations to facilitate non-permanent expatriate residents, are all core strengths that will continue to enhance value into the future.

Strong fundamentals make Dubai a lucrative option

Investor sentiment can sometimes be an intangible thing, in the case of the UAE real estate sector however there is a persuasive argument for optimism. Appropriate measures from the UAE administration, aimed at addressing the temporary plateauing of the market though targeted stimulus, further enhances the compelling strengths mentioned above.

An investor can currently hope to gain from the trifecta of 1) supportive legislation, 2) a relative lull in prices and 3) bright prospects for the future. A recovery in oil prices and higher than average rates of inflation in the UAE, in conjunction with an expected GDP growth rate of 3.3% in 2018, which is projected to rise further to 3.6% in 2019, provide strong underlying headwinds (1).

The World Economic Forum and World Bank’s ‘Arab World Competitiveness Report 2018’ has also singled out the UAE as a particularly resilient economy, well placed to remain highly competitive (2).In addition, the impact of Expo 2020 on Dubai’s real estate sector cannot be overstated. As an event that underscores the UAE government’s vision for the Dubai of the future, it should prove to be an inflexion point that reconfigures both real and perceived value, both of which are critical to investment prospects in the real estate sector.

Investors can leverage an advantageous regulatory environment

With the UAE announcing investment laws that allow foreign investors to own 100% of specific on-shore businesses within certain sectors, Dubai’s profile as an investor friendly and globally integrated commercial hub will be further enhanced, creating a perfect confluence between investment opportunities and infrastructure advantages. The recent announcement of 10 year visas in May 2018, as well as an extendable retiree visa available from 2019 that can be acquired on the basis of real estate investments, holds the promise of a market stimulus similar to that of the 2002 freehold decree by the UAE government. These advantages are further enhanced by a regulatory environment under the auspices of the UAE Escrow Law which significantly secures investor funds as well as the Dubai Land Department’s proposed RERA blockchain registry which will make the department the world’s first government entity to adopt blockchain technology.

Investors should identify options with low upfront costs and high returns

Dubai offers investors the twin advantage of lower entry costs than several of the world’s other premier cities, while concurrently delivering higher relative returns on investment, especially in terms of rental earnings. The absence of a property tax makes these high returns even more lucrative. The city’s developer community has also facilitated investment through highly innovative and affordable payment plans with guaranteed returns. Cavendish Maxwell’s recent Q3 2018 Dubai Market Report (3) underscores the relative ease with which investors can enter the market, with its findings indicating that 53% of all sales in the quarter consisted of off plan purchases. JLL’s Dubai Real Estate Market Overview Q3 2018 also points to the influx of international capital into the market, likely reinforcing bullish trends, into the future (4).

A maturing market with opportunities galore

Dubai benefits from a mature and highly competitive real estate industry that has come into its own, in terms of providing its customers with best in class services and products, at every budget point imaginable. With the emphasis on aspirational but affordable housing also gaining ground, virtually every segment of the Dubai real estate sector will now present options for the discerning investor or buyer. As the market expands and prospects multiply, beginner investors are likely to find compelling opportunities, with a little time spent in identifying the perfect fit for their budgets, lifestyle and aspirations.

Conclusion

Dubai Government’s vision of a progressive and future ready city is reflected in its comprehensive transport and communications networks. However the city’s amenities extend beyond basic infrastructure. Dubai is home to state-of-the-art medical facilities with obligatory employer provided health insurance mandated by law, several highly rated educational institutions, a stellar safety record and the rare distinction of being under the jurisdiction of a Ministry for Happiness! It’s no wonder that the city is attracting a rapidly growing population, crossing the 3 million mark midway through 2018. Succinctly, this is a good time for the interested investor to familiarize themselves with the opportunities emerging in Dubai real estate. The best property investment in UAE is a subjective matter but the good news is the emerging diversity in options.