Real Estate Investments in Dubai: Everything you Need to Know

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Christina
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29 May 2023
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article
29 May 2023
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Over the past decades, Dubai has become one of the world’s most promising economic powerhouses, earning the status of a true goldmine for investors across all sectors — and especially real estate. If you’re an investor looking to acquire a property in Dubai, you’ve come to the right place: we’ll be covering all the essential information you need to know before deciding to commit.

The best real estate offers

Dubai real estate market overview

The real estate market in Dubai has largely recovered from the pandemic and is now steadily growing. Over the past year, the average sale prices for residential property increased by 10–11%, while the average rent prices went up by as much as 21%. Offices are also doing well in the current conditions, having gained approximately 12% in price over the same period. Dubai is still affected by the global economic downwinds, which means that inflation remains a concern, but high occupancy rates and a high influx of high-networth individuals make for favorable predictions in the foreseeable future.

Despite the continuously rising prices, Dubai’s luxury real estate remains surprisingly affordable compared to other metropolitan cities — all the while offering an equally high, and sometimes even higher, standard of living. The city features a reliable transport network, high-end facilities, a strong sense of personal security, and a robust healthcare system that routinely applies the newest medtech developments. Just to put everything in perspective: one square meter in London costs approx. $1500, while in Dubai, this figure would rarely exceed $500, marking a 300% difference without any sacrifices in the quality of life.

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Safa One

Why invest in Dubai

No income tax

Yep, you read that right. The Dubai government doesn’t impose any taxes on personal income. This means that 100% of the money you earn here stays with you — and you don’t even have to report your income to local authorities. Investors still have to pay DLD (Dubai Land Department) fees and registration fees when they acquire a property, but these are one-time payments. Once the property is in your possession, you’ll only need to worry about maintenance costs, which hugely depend on the specifics of the project.

Excellent infrastructure

Dubai features unrivaled commercial infrastructure, with many major brands and companies striving to get a hold in the city. After all, this is a destination built to satisfy even the most demanding residents — whether natives or expats. Add to this a robust financial system, first-class education, сutting-edge healthcare establishments, as well as a vast array of cultural objects of interest, and you’ll get one of the most progressive cities in the MENA region.

Safety

Dubai is a heavily monitored city with strict rules and an ever-vigilant law enforcement system. Violent crimes here occur very rarely, and if they do, they are severely punished. It’s also important to note that most of Dubai’s population comprises affluent Emiratis and expats with little to no motivation to lash out in the streets. All of this makes Dubai a remarkably safe destination, ranked 35th in The Economist’s Safe Cities Index, surpassing Beijing, Moscow, and Istanbul (scroll down to see the rankings).

Strong economy

Dubai is an economic powerhouse that manages to successfully withstand global downturns. By 2023, it has largely moved away from oil-based revenues, now relying primarily on tourism and finance to generate its wealth. The same goes for the UAE economy as a whole: in 2022, the Emirates’ central bank estimated the real gross domestic product growth at 7.6%, while the predicted real GDP growth for 2023 is 3.9%.

At the beginning of 2023, Dubai’s Sheikh unveiled the Dubai Economic Agenda (D33) — a set of measures aimed at doubling the city’s economy by year 2033. If the Agenda succeeds, Dubai will find itself among the likes of New York and London in the upper echelon of the world’s most economically powerful cities.

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Safa Two

Booming tourism industry

Dubai is one of the world’s most prominent tourist destinations. In 2018, it became the fourth most-visited city on the planet, and in 2022, it received 14.36 million international visitors. This marked a staggering 97% increase as compared to 2021, when the city received only 7.28 million visitors due to various covid-related restrictions. Dubai’s hotel sector also continues to perform strongly. Such a dense flow of tourists offers great opportunities for investors who run both short-term and long-term rentals.

How you can invest

House flipping

This is how house flipping works: you buy a property, hold on to it for some time, and then sell it for a higher price. This approach is most effective when you invest in a project at the development stage and sell the acquired property right after it’s put into operation, thus making a huge profit (up to 10%). Alternatively, you can buy an apartment, refurbish it, and make a profit off of all the improvements you’ve made. However, the property might not sell quickly, so it’s important to have some capital set aside for all the maintenance expenses.

Short-term rentals

If you build your strategy around short-term rentals, your target audience are tourists who plan to stay in Dubai for less than a month. To pull this off, you’ll need to acquire a property in a high-demand, vibrant area that draws huge crowds of tourists — for example, Dubai Marina or Downtown Dubai. This approach can generate great profits in the high season, but is prone to being unpredictable in the low season. In addition, the property will require frequent cleaning and overall oversight — either by you or the representatives of a property management company of your choice.

Long-term rentals

Long-term rentals are much more stable. Once you find a tenant, you won’t have to worry about your income for the next several months — or sometimes even years. Since your target audience are people who plan to stay in Dubai for prolonged periods, you’ll likely need a property in more peaceful areas of the city, like the Palm Jumeirah or Emirates Hills. Since you’ll be holding on to that project for longer, you also stand to gain significantly more profit if you decide to sell it for a better price later on.

REITs

REIT stands for a real estate investment trust. These are companies that own and operate income-producing properties across a wide range of sectors, including, but not limited to, offices, apartment buildings, and hotels. REITs are treated as a distinct type of assets, and most of them publicly trade on major stock exchanges. The main advantage of REITs is that they allow you to invest in real estate without actually acquiring and managing any property of your own: you purchase company stock and earn a share of the income it produces, much like in other industries.

REIGs

REIG stands for a real estate investment group. REIGs are basically REITs, but smaller and more liberal in structure. They comprise multiple partners or private shareholders, and the combined greater pool of capital results in more exciting investment opportunities. This approach is perfect for high-networth investors who want to invest directly in real estate but do not wish to deal with all the managing responsibilities. Bear in mind, however, that REIG partners usually have to put up more money as an initial investment.

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Chic Tower

The best real estate offers

Promising locations

Dubai Marina

Dubai Marina is a vibrant community centered around one of the largest man-made marinas in the world. It consistently ranks among the highest-in-demand areas of Dubai, being equally popular among tourists and long-term residents. This part of the city features The Walk promenade, Dubai Marina Mall, a rich entertainment infrastructure, as well as plenty of boutiques and restaurants that attract thousands of visitors every year. And that’s not to mention the spectacular views of the marina. The perfect destination for short-term rentals.

Downtown Dubai

Downtown Dubai is probably the most iconic area of the city: Burj Khalifa, the Dubai Mall, the Dubai Fountain, and the Museum of the Future are all situated here, making it immensely popular among millions of tourists. It is also a major business hub with first-class infrastructure, including luxurious restaurants, entertainment venues, and high-end shops. Plus, since the area is located in the very heart of the city, you get perfect connectivity with other parts of Dubai. Downtown Dubai offers fantastic opportunities for both short-term and long-term rentals.

Business Bay

The name says it all, really. This area is Dubai’s key business district, with a total of 364 enterprises listed as its residents. Unlike Downtown Dubai, this part of the city offers a much quieter lifestyle and a focus on professional life, perfectly suitable for long-term rentals. There are nurseries and pre-schools, as well as world-class healthcare facilities and rich infrastructure. Although the district somewhat lacks in schools, the neighboring areas offer several top-notch private institutions that make up for this disadvantage. Business Bay also stretches along the Dubai Canal, which offers some great views at any time of the day.

Palm Jumeirah

An artificial island offering privacy and uncompromising luxury to Dubai’s most affluent residents. The tranquil setting, beautiful views of the Gulf, and a sense of detachment from all of the city’s hustle and bustle make it a very desirable choice for vacations. It’s also absolutely self-sufficient: the island houses supermarkets, hospitals, pharmacies, restaurants, outlets, and everything else you might need to lead a comfortable life full of pleasure and excitement.

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One Crescent

Tips for improving your ROI

ROI means return of investment. It serves as the key measure of profit derived from any asset that you purchase. You can calculate ROI using this simple formula:

ROI = Net income / Cost of investment x 100

For example, if you purchase an apartment for AED 600,000 and sell it for AED 700,000, your ROI stands at 16%. Most real estate investors aim for anything from 4% to 10%, which is generally considered the best value of this metric, but most Dubai projects offer a ROI of at least 10%.

There are several ways you can maximize your ROI:

Screen your tenants carefully. Before signing a contract, check the background of your potential tenant — their credit history, criminal record, and, ideally, employment checks. This way, you’ll be able to avoid problematic tenants who cause unnecessary financial losses and asset downtime.

Set competitive rental rates. Your prices should be in line with the market rate in the area: set them too high, and your property will likely stay vacant for most of the time; set them too low, and you’ll be underselling and damaging the ROI.

Upgrade the property’s features. This one is about adding value. Renovating and refurbishing an apartment can significantly increase rental income. Think about what improvements you can make: Maybe buy a new set of kitchen appliances? Change the flooring? Hire an interior designer to make the place look more visually appealing?

Investment options to consider

One JBR

Situated in the prestigious Dubai Marina, One JBR is a 46-storey residential building featuring apartments with 2–4 bedrooms and five-bedroom penthouses. All units boast panoramic windows and vast balconies with fantastic views of the sea and Dubai. The ceilings in the living rooms are 10 feet tall, providing a sense of ample space.

The floor area of the apartments starts from 1,600 sq ft, while the largest options exceed 3,200 sq ft. The penthouses are double the size of the largest apartments, measuring 6,700 sq ft.

The building has an adjacent private beach, thus becoming the only one in the neighborhood with direct access to the seafront. In addition to this, residents can enjoy an on-site gym, a spa, various cafés and restaurants, a barbecue area, and a children’s club. Residents who choose to acquire penthouses also gain access to private elevators.

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One JBR

Jumeirah Living Business Bay

A 35-storey residential tower located in the vibrant Business Bay area. The building houses an exclusive collection of apartments with 2–4 bedrooms, several five-bedroom penthouses, and an elite 12,000+ sq ft master penthouse that takes up the entire top floor. All units come with designer finishes and offer unobstructed views of Burj Khalifa, the Dubai Canal, and other highlights of the area.

The floor area of the units ranges from 2,000 to 9,600 sq ft. Owners of the penthouses get to enjoy private terraces and relax in a jacuzzi with hydromassage options.

Since the project is built in partnership with the Jumeirah Group, residents will also benefit from a range of premium hotel facilities like concierge service, a resident lounge, a guest relations team, and an on-site housing manager.

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Jumeirah Living Business Bay

Conclusion

If you are interested in acquiring real estate in Dubai, check out our regularly updated catalog of the best new projects or give us a call at +971 (4) 563-5256. We would love to make an individual selection and then show you everything in person — for free.

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