Why Dubai?

Why Dubai?

05.24.2024 (updated 05.24.2024)

  • AX Blog
  • Investment in Dubai - Why is Dubai the best solution?

When choosing destinations for relocation or investment, it is necessary to have a clear system of priorities and possess basic criteria for identifying profitable locations. In this article, we have selected several cases and suggested studying the behavior of the richest people in the world. After all, if they were able to earn fortunes, then they know something, and if they have information, why not share it?

Content:

Growth of tourism and influx of wealthy residents

Dubai regularly ranks among the most attractive cities in the world. According to Euromonitor International, a global research company, the metropolis is the leader in tourist and excursion flow – 16.8 million people.

In December 2023, hotels in Dubai reached a record occupancy rate, significantly impacting their revenues. According to CoStar Group, the average daily room rate (ADR) for the month was the highest on record.

In 2023, 4,500 millionaires moved to the United Arab Emirates, according to a study by Henley & Partners, as the country has earned the status of a haven for wealthy individuals from around the world. In the capital migration ranking, the UAE ranked second after Australia (5,200 millionaires).

“High-net-worth-individual migration statistics speak volumes. Affluent families are extremely mobile, and their transnational movements can provide an early warning signal in terms of a country’s economic outlook and future country trends. Like the proverbial canary in the coal mine, they alert us to dangers that may lie ahead as they are more sensitive to potential threats to their wealth and usually have the resources to take a corrective course of action to preserve their legacies.” 

— Dr. Juerg Steffen — CEO of Henley & Partners — the world leader in the study of capital migration.

Many factors that attract millionaires to the UAE:

• Security: a key factor, especially in unstable times, which is why so much private capital flows into the UAE. Dubai offers a reliable regulatory environment: the country respects the rule of law and guarantees economic freedom. 

• Taxes: Dubai boasts some of the most competitive tax rates in the world, making it an attractive place to do business and reside.

• High-quality medical care: the UAE is known for its high quality of medical services, which attracts many international patients.

• Entertainment and luxury: the UAE offers a wide range of entertainment — from luxury shopping malls and restaurants to premium and business class real estate and communities.

• Education: over 200 international schools in the UAE offer high-quality education for the children of millionaires.

• Year-round resort: the UAE is famous for its beaches, water parks and marinas, providing recreational opportunities throughout the year.

For investors

Despite the perception that Dubai has grown on oil revenues, the city's main sources of income are tourism and real estate. UBS analysts, as part of the UBS Global Real Estate Bubble report, have rated the Dubai real estate market as "not overvalued", its real value is significantly higher than the current market value – the city is protected from the real estate bubble.

An index exceeding one point indicates the threat of a bubble in the market. If the value of this index approaches 1.5 points, this means that a collapse may occur in the near future. In this case, prices and demand for real estate will begin to decline, which may lead to losses for investors.

Cities with a high real estate bubble risk
Visualization of cities by real estate bubble risk

According to the UBS report, there is no threat of a bubble forming in the real estate market in Dubai. The housing market in the emirate remains very promising, ranking 23rd with an index score of 0.14 one of the lowest risk levels.  

Dubai could grow steadily over the next 5-10 years. The latest increase in rental prices in some areas of the city by 25% indicates real demand. In addition to successful cases, there are a number of factors that influence confidence in the relatively high safety of investments. 

Why Invest in Real Estate?

1.  Capital preservation. If you choose a reliable property, your capital will not only be protected from inflation but it can also increase in price. For example, if you have $1,000,000 in cash and inflation in your country is 5% per year, and the average annual growth of real estate prices is 7%, then your real economic result will be 2% capital growth per year. Therefore, purchasing such a reliable asset as real estate will not only preserve your funds when inflation rises but also increase them in the future.

2.  High profitability. The demand for real estate in Dubai continues to grow, reaching new record highs. In August, 12,000 purchase and sale transactions were completed, which is 23.7% more than a year earlier. Market activity in Dubai is not decreasing even against the backdrop of increasing supply. This year, local authorities have supported several coastal projects that were previously inactive or frozen. One of the most notable examples is the revival of Palm Jebel Ali, on which nothing has been built for over 10 years. The government announced the relaunch of the project in 2023. Jebel Ali is expected to show even greater value growth than Palm Jumeirah – up to 45-60%. The interest in the new island is so high that during the start of sales, there was a crush due to the large number of buyers.

3.  Passive income. Real estate is a truly passive and reliable source of income. UBS records a 50% increase in rental real estate prices compared to the previous two-year period.

Why do you need a reliable agent?

When looking for an investment opportunity, you can't do without the help of an agent. An experienced professional will not only help you save valuable time but will also help you to pick up on the best real estate tips and give you access to a huge database of properties. When you purchase properties through a real estate agent, you pay 0% commission as the developer himself pays the agency. If it is a secondary housing market, the payment to the agent is 2%, but without him you will not be able to buy or sell the property. 

How an agent can help you:

- Select the best real estate;

- Provide reliable money transfers;

- Assist with collecting the necessary documents and drawing up powers of attorney;

- Help to establish a legal entity, if the acquisition is for a company;

- Assist in obtaining a resident visa;

- Open a bank account, if necessary;

- Assist with getting keys;

- Take over the management of your property;

- Provide after-sales service.

Why buy now?

Many are waiting for the market to correct, thinking that the real estate boom will end in the next two to three years. There are investors who have been waiting for this since the pandemic, they have already missed important opportunities, while the others have made good money. Yes, the market has been on the rise lately, but this does not necessarily mean that prices will return back to previous levels in the subsequent period. Property prices in Dubai are rising at a steady pace for real reasons that show an enviable consistency: the population is growing every year (record 3% in 2023), the huge migration of millionaires, the opening of casinos and the westernization of culture. In accordance with the Master Plan for the Development of the Emirate, by 2040, 7.8 million people will be able to live on its territory in comfortable conditions. According to the plan, Dubai should become the best city in the world to live.

All these obvious factors cannot be ignored: it is highly unlikely that even despite the boost, prices will ever return to their previous positions. All this is evidenced not only by expert opinions of authoritative organizations but also by clear facts as well as living examples of our clients. 

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