Real Estate Investments: UAE vs. Turkey in 2024

The real estate markets of the United Arab Emirates and Turkey have experienced significant growth in recent years, making them highly attractive for investments. Factors such as the opportunity to obtain long-term visas or citizenship, the potential for apartment value appreciation, and the year-round warm weather have captivated investors. In this article, we will explore the advantages and potential pitfalls associated with purchasing real estate in these countries.

The UAE is a federal state with an absolute monarchy located in the southwestern region of the Arabian Peninsula. Its strategic location between Europe, Asia, and Africa positions it as an ideal hub for international business activities. The UAE comprises seven emirates, each with its own set of laws and unique characteristics. The most popular emirates for expatriates and investors are Dubai, where approximately 80% of foreigners reside, and Abu Dhabi. These cities boast highly developed real estate and labor markets. Investors flock to the UAE due to its favorable investment climate, exemplified by the presence of over 100 branches of major firms listed on the S&P 500.

Turkey is a secular state occupying the Asian Minor peninsula and a small portion of the Balkan Peninsula. While it has long been a favored destination for beach holidays among Russians, Turkey is also increasingly recognized as an attractive investment location. It has emerged as a leader in real estate value growth, as indicated by the Global House Price Index rating. The country offers a streamlined process for obtaining citizenship while retaining one's original citizenship. Furthermore, Turkey has an E-2 treaty agreement with the United States, allowing individuals to relocate and conduct business in the US under a nonimmigrant visa.

Country comparison  

Nuances of buying real estate  

From a legal standpoint, both countries allow foreigners to purchase real estate. However, there are certain considerations to keep in mind. In the UAE, apartments can only be purchased in specific areas known as freehold zones. In contrast, Turkey grants foreigners the right to buy property in nearly any region, with the exception of strategically important zones.

The process of registering purchase and sale transactions in both countries is relatively straightforward and efficient.

By purchase price  

In Turkey, the most expensive real estate can be found in Istanbul, where a well-appointed two-bedroom apartment with an area of 60 square meters starts from 13 million rubles, while prices in Antalya start from 5 million rubles. It's important to note that the cost of real estate can vary based on location and other factors, meaning simpler apartments may have lower prices. The average price per square meter in Turkey is slightly above 48,000 rubles.

On the other hand, real estate prices in the UAE are considerably higher. For instance, the average price of properties in Dubai exceeds 22 million rubles, with the cost per square meter surpassing 245,000 rubles.

Places to buy real estate  

UAE  

As mentioned earlier, non-Arab foreigners can acquire real estate in the UAE within freehold zones, and there are also leasehold zones that allow long-term rental for up to 99 years.

Let's explore some of the freehold zones available in Dubai:

• Bluewaters Island is situated off the coast of the JBR area and home to the world's largest Ferris wheel, Ain Dubai.
• Business Bay is located along the Dubai Water Canal. 
• Culture Village is a coastal area nestled along Dubai Creek. 
• Downtown Dubai is the vibrant central district of the emirate.

Dubai offers more than 70 such zones in total.

Since 2019, foreigners have also been able to purchase real estate in Abu Dhabi, with 17 zones now designated as freehold.

Turkey  

As mentioned earlier, Turkey allows foreigners to purchase real estate in practically any region or area. For those seeking value, the city of Alanya is worth considering as it offers prices that are around 10-15% lower than its neighboring city, Antalya. Another rapidly developing area is Mersin, where apartments can be found starting from 4.9 million rubles.

For those considering properties for rental purposes, Istanbul offers projects with hotel services such as GS Leo and Bomonty by Rotana. It is advisable to enter into a delivery contract with a company that will handle all operational processes. Typically, they take a 25% share of the rental profits. On average, such real estate options yield approximately 5%, allowing for investment recoupment in about 5 years.

Investing in projects near the coastal areas is also a viable option. Typically, low-rise buildings are constructed, which results in shorter construction periods. If you purchase real estate during the excavation stage, you can expect to start renting the apartment within 1-2 years.

For those planning to resell real estate, it is advantageous to purchase during the construction stage. The sooner, the better, as the price difference between the pre-construction stage and completion in Turkey can reach up to 20%.

It is worth noting that there are two prices in Turkey — the list price and cash price. Buying real estate for cash is more advantageous as developers often offer substantial discounts. For example, an apartment listed at $600,000 can be purchased for $490,000 when paid in cash.

Overall, prices from developers to primary buyers can differ by approximately 20% from the actual value. Hence, it is important to be well-prepared for the purchasing process and consult trusted brokers who can assist in selecting lucrative projects and negotiate favorable terms with developers.

UAE  

Investing in real estate in the Emirates offers prospects for obtaining a long-term resident visa, similar to a familiar residence permit. Currently, there are two types of investment visas available to foreigners:

• 2-year visa with a purchase price starting from $205,000.
• 10-year visa, also known as a golden visa, requiring a property price exceeding $545,000.

Investors can also apply for resident visas for their families, subject to certain requirements. For instance, the purchased property must be completed and ready for occupancy. Additionally, specific conditions may depend on factors, such as the sponsor, the investor's income, and the completion of a medical examination, among other considerations.

Turkey  

Investors purchasing real estate in Turkey can apply for a residence permit and potentially citizenship. A residence permit is automatically granted upon property acquisition, regardless of the purchase price. After residing in the country for five years, investors become eligible to apply for citizenship.

Moreover, there is an accelerated pathway to obtaining a Turkish passport. By purchasing real estate valued at over $400,000 (approximately 35 million rubles), investors can qualify for a Turkish passport in a faster manner.

Return on investment and benefits  

In the UAE, the average payback period for real estate investments ranges from 10 to 12 years. Dubai has witnessed a significant rise in the ROI rankings since 2022. ROI, or return on investment, measures the effectiveness of funds invested and calculates the return on investment ratio. The formula for calculating ROI is straightforward: ((income — expenses) / investments) * 100%.

In the UAE, the ROI can reach up to 28%, with an average return on investment not falling below 7%. The exact figure depends on factors such as location, property class, and value. Generally, apartment owners in the UAE can expect an annual return of 5-10% from renting out their properties.

Turkey has emerged as a leader in real estate price growth, as indicated by the Global House Price Index rating for 2022. As a result, the payback period for purchased apartments in Turkey has reduced compared to global indicators. In practice, real estate investments in Turkey can be recouped within 4-5 years, and with the added price appreciation, investors can potentially achieve significant gains. For instance, investing $200,000 in a two-bedroom apartment in Istanbul's Basaksehir district and renting it out can yield an approximate annual return of 6.4%.

Transport accessibility  

Both countries offer excellent transport accessibility. There are direct flights from various major cities in Russia to both Turkey and the UAE.

For instance, flights from Moscow to Turkey typically last between 3 to 3.5 hours, depending on the specific arrival city. The journey to Dubai takes slightly longer, approximately 5 hours.

Another advantage is the availability of reputable airlines serving both destinations, including Aeroflot, S7, Emirates, and others.

Taxes and fees  

Taxes in the UAE  

• In Dubai, both the buyer and seller are required to pay 4% of the cadastral value of the property for the transfer of ownership. 
• In Abu Dhabi, the tax rate is 2%. This tax is paid to the Land Department (DLD) during the transfer of ownership rights. 
• There are no annual taxes on real estate in the UAE. However, there are contributions for the maintenance of apartments, which are determined by the developer. 
• There is no inheritance or donation tax applicable.

Taxes in Turkey  

• In Turkey, both the buyer and seller are subject to a 4% tax based on the cadastral value of the property for the transfer of ownership. 
• Property owners in Turkey are required to pay municipal taxes annually, ranging from 0.1% to 0.6% of the property's value. 
• Landlords in Turkey are obligated to pay income tax on a progressive scale, ranging from 15% to 40% depending on their rental income. 
• There is also a luxury tax imposed on properties valued above $280,000. The luxury tax rate ranges from 0.3% to 1%.

Both Turkey and the UAE are warm countries, but they differ significantly in terms of climate. The Emirates has a tropical desert climate characterized by frequent sandstorms and minimal rainfall. In Dubai, the average winter temperature hovers around +25 °C, while summer temperatures can reach up to +50 °C. The combination of intense summer heat and dry air may not be suitable for everyone. The natural beauty of the UAE is primarily characterized by its vast dunes and the Persian Gulf.

Turkey, on the other hand, boasts a milder and more favorable climate. Even in the southern regions of the country, you won't experience the same level of dryness and extreme heat. Due to its geographical location, Turkey exhibits a range of climate types. In the central Anatolian region, a temperate continental climate prevails, featuring distinct seasons with hot and dry summers and cold, snowy winters. This makes the central mountainous areas suitable for winter activities, serving as an alternative to European ski resorts. Regions of Turkey located near the Mediterranean coast fall within the subtropical Mediterranean climate zone.

In terms of nature, Turkey offers a greater diversity and richness compared to the UAE. The country is home to coniferous forests, mountains, freshwater reservoirs, and four seas which are the Mediterranean, Black Sea, Aegean Sea, and Marmara Sea.

Religion  

While both countries have a Muslim majority, there are differences in the requirements for visitors.

In Turkey, there is a more lenient attitude towards foreigners who do not adhere to Islamic laws. They are generally accepting of diverse practices and beliefs.

On the other hand, the UAE has stricter regulations regarding religious observance for guests. Visitors are expected to respect and follow religious rules. For instance, it is prohibited to be intoxicated in public or consume alcohol in public places. In the emirate of Sharjah, there is a strict ban on alcohol consumption even within hotel premises. Additionally, public displays of affection, such as holding hands or kissing, are not allowed and can result in fines.

Standard of living  

According to the website Numbeo.com, a rating of countries based on the standard of living was compiled. The rating took into account various factors such as safety, quality of the healthcare system, likelihood of natural disasters, pollution levels, overall cost of living index, and more. In this ranking, the UAE occupies the 15th position, while Turkey is ranked 51st.

In the UAE, the requirements for buying an apartment are minimal. All that is needed is a passport, visa, and proof of residence address in the country. Purchase and sale transactions can even be conducted remotely.

In Turkey, the process of buying real estate as an individual involves collecting a more extensive set of documents. This includes obtaining a Turkish Tax Identification Number (TIN), opening a bank account in a local bank (which requires an INN), providing a passport with a photocopy, and presenting an internal passport with a registration mark. Additionally, a permit from the state may be required to proceed with the transaction. While not mandatory, issuing a power of attorney for a realtor can facilitate the transaction process.

What to choose and why?  

Both countries offer simplified processes for obtaining a residence permit through investment, with the UAE referring to it as resident status. However, the requirements in Turkey are comparatively less strict. Furthermore, investing in Turkish real estate provides the opportunity to obtain citizenship by investing $400,000. On the other hand, the UAE's zero-rate tax system is more investor-friendly, contributing to its popularity among investors.

When making a choice between these countries, the UAE can be an excellent option for those interested in investing in real estate without intending to live there permanently. Turkey, on the contrary, is more suitable for individuals planning to relocate permanently.

Briefly about the process of buying property  

In the UAE  

The process of buying real estate in the UAE involves several simple stages. First, you need to choose a property and a developer. Then, a deal is made, and a contract is signed. The contract should include details such as the property's address, the transaction amount, the responsibilities of the parties involved, information on additional payments and payment terms, and the delivery date for new construction projects.

As part of the sales contract, the «Contract F» is also signed, which serves as insurance for the seller. An initial payment of approximately 10% of the transaction amount is made as an advance. The seller must obtain a No Objection Certificate (NOC) stating that there are no objections to the sale. The transfer of ownership takes place at the Land Department, where the payment is made, and the buyer becomes the rightful owner on the same day.

In Turkey  

The process of buying real estate in Turkey consists of several stages. It starts with the signing of a sales contract and making a deposit, typically 5-10% of the property's price. The next step involves preparing the necessary documents for registration and completing the payment for the property. An essential aspect is the registration of the TAPU certificate, which serves as the main document confirming ownership and is issued by the Cadastral Office. The final stage of the transaction involves the new owner signing contracts with utility providers for the property.

Several options for purchasing property in the Emirates  

Golf Grand  

Golf Grand is an exclusive residential project situated in the Dubai Hills Estate district. Its strategic location provides residents with convenient access to Al Khail Road, allowing a 15-minute car ride to the vibrant city center and the iconic Burj Khalifa.

Within a 2-minute drive from the projects, residents can reach the Dubai Hills Golf Club Golf Course. The renowned King's College Hospital London is also just a 5-minute drive away. For those seeking quality education for their children, GEMS Wellington Academy, GEMS International School, and GEMS New Millennium School are all within a 10-minute drive.

The developer offers a variety of floor plans, ranging from cozy 1-bedroom apartments to spacious 3-bedroom residences. With a focus on functionality, each of the 323 lots is thoughtfully designed. They feature balconies or private terraces with panoramic views, laundry rooms, dressing rooms, and some even provide a staff room to maintain residents' privacy. All lots are delivered with tasteful finishes.

Abundant natural light fills the rooms throughout the day, thanks to the panoramic windows. The spacious balconies offer an opportunity to admire the lush surroundings of the complex or enjoy romantic sunset dinners.

Upon entering the luxurious lobby, residents immediately experience the comfort of the residential complex. The concierge service is available to assist with various household matters, including purchasing plane tickets, arranging deliveries, or enrolling children in tennis classes.

Modern communal spaces are designed within the podium area for the enjoyment of the residents. After a day's work, one can unwind in the exquisite infinity pool with breathtaking natural views or soak up the sun by the water. The modern fitness center provides an opportunity for exercise, while safe play areas are created for children to have fun with their peers. In the evenings, families can take leisurely walks amidst the greenery or enjoy picnics in the barbecue area.

Let's calculate the potential profitability.

For instance, if you purchase a 1-bedroom apartment for rental purposes at $374,000, with an average monthly rent of $2,300, the annual rental income would amount to $27,600. We can calculate the return on investment (ROI) using the formula: (income — expenses) / investment. In this case, the ROI for a 1-bedroom apartment would be: (2300 * 12) / 374,000 = 27,600 / 374,000 = 7.4%. It's important to note that lump-sum payments and taxes related to the purchase were not taken into account in this calculation.

Jumeirah Living Business Bay is an exquisite 35-floor residential tower situated in the prominent Business Bay district of Dubai. Its architectural design resembles a sail billowing in the wind, with a shimmering facade crafted from glass and white panels.

Within a 10-minute walk, residents can access Business Bay 1 Metro Station and bus stops at Lilian Tower, The Binary Tower, and Clover Bay Tower. For alternative transportation, an RTA Marine water taxi service is available. Famous attractions such as Dubai Mall, Burj Khalifa, and Dubai Fountain are just a 15-minute drive away, while family-friendly destinations like Dubai Bowling Center, Wild Wadi Waterpark, and Safa Park can be reached in a 20 minutes by car.

The project comprises 82 exquisite residences, each offering breathtaking panoramic views of the Dubai Canal. The pinnacle of luxury is the penthouse located on the tower's 35th floor, featuring 5 bedrooms, opulent living and dining areas, a dedicated office or library, a sauna, and a private gym. The penthouse owners can unwind in the Jacuzzi with hydro massage on their own terrace, enjoying a serene retreat with a bird's-eye view of the city. The balconies provide stunning vistas of the city center, Burj Khalifa, and Dubai Canal.

All apartments are sold fully furnished, adorned with soft brown interiors. The kitchens are equipped with state-of-the-art appliances, complemented by honey-colored wooden facades and delicately designed gold accents. Marble floors grace the elegant bathrooms.

Upon entering the lobby, residents are embraced by a sense of comfort and tranquility emanating from the honey-toned wooden panels. The lobby lounge features exquisite upholstered furniture, designer art pieces in soothing pastel tones, and functional spaces for work, study, and delightful gatherings with friends. Through the panoramic windows, residents can enjoy captivating views of the shimmering water channel.

Residents of the complex have access to an outdoor temperature-controlled swimming pool, inviting relaxation areas, and captivating bay views—ideal for unwinding after a long day or spending quality time with family and friends. For fitness enthusiasts, the tower boasts a modern, fully equipped gym with panoramic windows, allowing for an invigorating workout while admiring the bay views.

In the evening, residents can take a leisurely stroll along illuminated pathways, passing by charming cafes and fountains, and enjoy waterfront views right at the foot of the complex.

To estimate the approximate return on investment (ROI) for a 2-bedroom apartment, priced at $2 million, let's consider the scenario of purchasing during the construction phase at the end of 2022 and selling the property after the completion of the project. On average, real estate in prestigious areas of Dubai appreciates by 13% per year. The project is scheduled for completion in the fourth quarter of 2025. The following calculations can be obtained.

Calculating Return on Investment (ROI) with consideration of taxes

Taking into account the projected increase in the cost of apartments by $885,794 over a span of three years, we can now calculate the ROI, factoring in the tax incurred during the purchase of the real estate:

Whether you have a desire to purchase a property in Dubai (UAE) or Turkey directly from a developer, we are here to provide our assistance. Our team of experts will guide you in selecting options with high liquidity and provide support in obtaining a residence permit or citizenship.