The specifics of investing in Dubai real estate: tips from the professionals

Real estate in Dubai is a great option for investment. This highly liquid asset will not only combat inflation but also ensure a significant profit. Housing prices in the emirate are steadily rising; in 2022, they increased by an average of 8.5–23%. This long-term trend makes investing in local real estate safe and profitable. However, novice investors do not always take into account all the specifics that make it possible to choose the right property. In this article, we‘ll discuss what you should pay attention to when choosing a property for investment and how to outline a clear investment strategy.

Contents:

• Growth and containment factors: what attracts investors
• Strategies for investing in Dubai real estate
• Tips from the experts
• Dubai’s best development projects for investment in 2023
• Damac Harbour Lights
• Petalz
• Ritz-Carlton Residences
• Bayview by Address Resorts
• The Autograph by Green Group
• We can help you buy property in Dubai for investment

Several factors ensure that  Dubai real estate is a reliable and profitable asset.

1. Dynamic price growth. The growth this year is forecast to reach 13.5 to 15%, while in some areas the growth could be as high as 46% or more.
2. High return on investment (ROI) when leasing. The ROI can reach 5 to 13% depending on the location, the class of housing and the terms of the lease.
3. The absence of currency fluctuations. The value of the UAE dirham to the dollar has remained unchanged since 1997, allowing you to know the exact value of your assets as they do not depreciate and their growth can be fixed in both the local and international market.
4. Even if real estate prices briefly fall, as they did at the beginning of the pandemic, they are certain to rise again and each cycle is fixed at a higher level.
5. There’s no risk of financial bubbles. From this point of view, Dubai is one of the top three safest cities with a natural increase in prices, as per a report from the Swiss holding company UBS.
6. No taxes on residential real estate or personal income. You won’t have to spend extra money and give a significant portion of your profits to the state. Everything you earn on investments legally remains in your account.

As a nice bonus, when buying a property in Dubai worth 750,000 AED (USD 204,000), investors receive the right to a UAE resident visa for themselves and their family members.

There are two main strategies for investing in real estate: short-term and long-term.

In the first case, you buy a property under construction (off-plan), either at the stage of the foundation pit or at the early phase of work, when prices are the most profitable. This is perfectly safe in Dubai: the local authorities strictly control the developers and require a report on each phase of construction, while investors’ money is kept in a closed escrow account, so it’s simply impossible not to complete the construction. Off-plan housing costs substantially less than finished homes. An investor can resell the asset once the complex is completed and earn up to 20–30% of the original price.

The long-term strategy is to rent out the property. You can choose to lease it for a long or short period. The first option brings a more stable profit — the average ROI ranges from 5 to 8% annually. Daily or monthly rental provides 11 to 13% annually but is not available in every complex.

When choosing an investment property, it’s necessary to consider several specifics that may not be obvious to those who are new to the market.

• Premium real estate is not only an option for personal use but also a great investment asset. Prices in Dubai’s upscale communities are rising several times faster than the market average. In 2022, the value of real estate in the super-elite area of Jumeirah Bay increased by 100%, by 56% in the Bluewaters community and by 54% on the Palm Jumeirah island.
• Developing areas are extremely profitable for long-term investments. Prices in these areas are lower than in the popular waterfront and central communities but they increase as the infrastructure develops. Thanks to this, prices in the Dubai Hills community have doubled, says Ruslan Sharipov, a broker at the AX CAPITAL real estate agency in Dubai. Another example today of such an area is the Maritime City.
• It’s believed that studios have the highest ROI but this is not always true. In the Dubai Investments Park community, the average ROI for studios is 7.1% annually and 8.5%. e for three-bedroom apartments. In the prestigious Dubai Marina district, the ROI for studios is 6.8% annually and exceeds 9.6% for luxury 5-bedroom villas.

As per Aram Grigoryan, a senior real estate consultant at AX CAPITAL, there‘s hardly any universal real estate that would fit any strategy. That’s why it’s important to be clear about your goals and purchase budget.

“Do you only need real estate for investment? If so, do you want to earn rental income or are you focusing on short-term options with the goal of reselling the property more expensively in a year? Or do you plan to rent out your apartment for part of the year and then come back and live there? The clearer your answers are, the more accurate and faster your real estate consultant can pick up the right property,” said the expert.

It’s better to choose a project for a specific request after a consultation with a specialist who knows the market and can take into account the individual circumstances and needs of the investor. We will examine the top five projects which are suitable for different investment strategies.

Damac’s new project in the up-and-coming Maritime City neighbourhood is a rare and valuable opportunity for investors. Premium residences with one to three bedrooms, branded designs and stunning sea views can be purchased here at a price significantly below the market — from AED 1.32 million (USD 359,500). Ready-made apartments in nearby locations are already 1.5–3 times more expensive. The area itself will be developed simultaneously with the complex and will boast an elite office and entertainment infrastructure. As a result, by the time of commissioning in 2027, the investors will receive waterfront apartments in an elite business and tourist community with a marina and a yacht club.

A complex with affordable studios and apartments in the International City community. The prices are very favourable. Here, you can buy a studio for only AED 400,000 (USD 109,000) with an ROI of up to 8.3% annually. The project offers a wide range of amenities, from a swimming pool, sauna and beauty salon to a nursery school and a doctor on call. It’s a great option for rentals. In general, the area is popular with young professionals and entrepreneurs and has a favourable real estate value, making it very popular with investors.

A premium wellness development with apartments and villas within the Keturah Spa Resort. The complex offers premium amenities, five-star service, access to a wellness hotel, a private beach and club with a Michelin restaurant, a fresh bar and a health food café. Services for residents include butlers, doormen, concierges, event reservations, private jet or car reservations and more. Prices start at AED 5.8 million (USD 1.57 million). This luxury real estate will become a reliable long-term investment.

A twin tower in the Emaar Beachfront community with brand-name apartments, penthouses and a variety of amenities for a resort lifestyle. The ROI in the community can reach 8% annually. Prices start at AED 3.3 million (USD 898,500). Construction has just begun so a significant profit can be made after the handover.

A complex with studios, simplexes and duplexes in the cosy family community of Jumeirah Village Circle with developed infrastructure. Studios are available from AED 690,000 (USD 188,000) with an annual ROI of 7.7%. The community, with 30 parks, schools, shops and excellent transport accessibility, is very popular with tenants with children. Villas and townhouses are also available here for AED 1.5 million (USD 408,500) with a 6.3% ROI.

AX CAPITAL’s experienced brokers know the Dubai real estate market inside out. Leave an application through the feedback form for a free consultation on buying and investing in real estate in the emirate. We can help you outline the best strategy, choose a profitable property with a high return according to your needs and budget, as well as answer all questions related to the purchase.