Dubai’s real estate market: What international buyers need to know

Dubai’s real estate market is thriving, with record transactions and significant price increases. 2023 recorded 93,590 residential transactions by October, surpassing the previous year’s total.

Property values soared, with apartment prices rising by 18.7% and villas by 21.4%. Rentals also surged by 19.7%, with projections indicating further increases of up to 20% in 2024. Despite the influx of new units, strong demand from local and foreign buyers is expected to drive further price rises.

What key factors are driving growth in Dubai?

Several key factors contribute to Dubai’s robust property market growth, including:

• The introduction of Golden and Green visas
• Tax benefits
• Waiver for visa fees on children under 18 accompanied by an adult
• A business-friendly environment and thriving business districts
• A thriving economy driven by trade, finance and tourism
• Ease and flexibility in banks’ lending criteria
• Ongoing government support in the real estate market
• Abundant job opportunities
• High standard of living

Dubai offers overseas families and residents some of the best modern amenities, a diverse expat community and a strong economy. The absence of a taxation system makes this city an economically advantageous destination for global property investors.

However, purchasing real estate abroad can be challenging due to the multiple rules and regulations that must be adhered to. This detailed guide addresses foreign investors’ concerns about buying property in Dubai, providing essential details and information about the emirate’s real estate market.

Economic and political stability

One of the cornerstones of Dubai’s appeal is its robust economy and political stability, making it an ideal hub for real estate investment. The city has successfully diversified its revenue streams, reducing dependence on oil and fostering a thriving business environment. Key pillars of Dubai’s economy include tourism, trade, aviation and real estate. Besides, the Dubai Government has implemented different policies to foster a business-friendly environment, including:

• 100% foreign ownership in specific sectors
• A transparent legal system that upholds property rights and enforces contracts effectively
• Favourable tax regime with no personal income tax, capital gains tax or wealth tax

Strategic location

Dubai’s strategic position at the crossroads of Europe, Asia and Africa has transformed it into a global trade and logistics hub. Its world-class infrastructure, including Dubai International Airport and Jebel Ali Port, facilitates seamless global connectivity. This geographic advantage enables seamless trade and logistics operations, benefiting investors and businesses.

Legal framework

Dubai’s legal framework is designed to protect investors. Overseas buyers can purchase property in designated freehold areas, enjoying the same rights as locals. The Real Estate Regulatory Agency (RERA) oversees property transactions, ensuring transparency and confidence in investors.

What are the tax benefits for investors in Dubai?

Dubai’s tax-free environment is a major draw for global investors seeking to maximise their profits. The UAE does not impose personal income tax, meaning individuals are not taxed on their salaries or income generated from investments and capital gains tax, where profits earned from property sales are exempt from taxation.

Can I get a residential visa upon entering the Dubai real estate market?

Yes, investing in Dubai property can qualify you for a residential visa. There are two primary types of visas available for property investors:

1. Golden Residence Visa:

• Investors who purchase one or more properties worth at least AED 2 million are eligible for a 10-year residency visa.

2. Relaxed Visa Regulations for Seniors:

• Foreign nationals over 55 can obtain a five-year residency visa if they own property valued at AED 1 million or more.

What are the types of property ownership one can pursue in Dubai?

The real estate market in the United Arab Emirates (UAE) is welcoming to foreign investors. While there are some regulations to be aware of, the property ownership process is relatively straightforward. In designated freehold areas, international investors can outright purchase a property and the land it is built on—including both residential and commercial properties. In such transactions, foreign buyers have rights similar to those of local owners, including the right to sell, lease or rent out the property.

Another option is leasehold ownership, which grants you ownership rights for a specified period, typically up to 99 years. Leasehold properties often offer lower purchase prices and higher rental yields.

Choosing between freehold and leasehold depends on your long-term goals, investment objectives and budget.

Residency in the UAE is not a prerequisite for property ownership. Many international buyers purchase properties in Dubai for investment purposes or as holiday homes – without residing in the country full-time. There’s also no minimum investment requirement imposed by the UAE – making Dubai an accessible market for a wider range of investors.

How dynamic is Dubai’s real estate market?

Dubai’s real estate market caters to a wide range of investors with varying affordable to affluent budgets and preferences. Investors can choose from:

Depending on the requirement, investors further have the option to choose from:

a. Luxury Waterfront Projects:

– ideal for those seeking premium investments
– most waterfront projects offer high-end amenities with stunning views

b. Family Communities
– developments designed with families’ comfort in mind
– offer a range of surrounding amenities such as schools, parks and healthcare centres

As an overseas investor looking for a property in Dubai, you can choose between ready projects or off-plan developments. Ready properties are those where the building stage is finalised, while off-plan properties are those under construction. Here’s an overview of both options:

The most popular developments and areas in Dubai for foreign investors include:

• Jumeirah Village Circle
• Bugatti Residences, Business Bay
• Jacob & Co Residences, Business Bay
• Downtown Dubai
• DAMAC Lagoons
• Jumeirah Village Triangle
• Dubailand
• Sheikh Zayed Road

A recent report reveals that off-plan home sales surged by 73% in the first quarter of 2024 compared to the last quarter of 2023. During this period, off-plan transactions accounted for 63% of all home sales in Dubai, indicating strong demand for properties still under construction.

What are the different benefits of investing in Dubai as a foreigner?

Let’s delve deeper into the factors that contribute to Dubai’s attractiveness for investors, starting with:

➔ High Return on Investment (ROI)

Dubai’s real estate is renowned globally for offering excellent rental yields, often surpassing major mature markets like New York. Property prices in Dubai have shown a steady upward trend in recent years, with strong rental yields contributing to overall investor returns. Here’s a breakdown of the factors contributing to high ROI:

Beyond the financial returns, Dubai offers residents and investors an unparalleled quality of life. This includes:

➔ World-Class Infrastructure: Iconic landmarks such as the Burj Khalifa, the Dubai Mall and Palm Jumeirah, in addition to various modern healthcare facilities, the world’s longest driver-less and fully automated metro rail network, roads, huge, busy airports and top-tier educational institutions

➔ High-End Retail and Dining: Some of the best high-end retail facilities, dining and entertainment options, including The Dubai Mall, Mall of Emirates and more than 90+ Michelin-starred restaurants

➔ Safety and Security: Ranking third globally, Dubai underscores its reputation as a secure place to live, boosted by low crime rates and stringent law enforcement

➔ Education and Healthcare: More than 65 globally-recognised colleges and education facilities and numerous dedicated student facilities provided by the Dubai International Academic City (DIAC)

➔ Multicultural Environment: Home to over 200 nationalities makes UAE, especially Dubai, a melting pot of different cultures

How is Dubai advancing sustainability?

The emirate government is dedicated to creating a sustainable future. They have fast-tracked their green initiatives since leading projects like Sustainable City. Dubai government has pledged to reach net-zero emissions by 2050 and committed a $54 billion investment in renewables by 2030, demonstrating its strong commitment to environmental preservation. A few initiatives to promote green living include:

As an overseas property buyer, what are my finance options?

Dubai offers flexible financing options to cater to diverse investor needs:

1. Mortgage for non-residents

Non-residents can secure property loans from many UAE banks subject to certain conditions and requirements, with options including conventional and Sharia-compliant mortgages. The loan-to-value (LTV) ratio for non-residents is typically around 50-60% of the property’s value. Buyers may need to provide additional documentation, such as proof of income, bank statements and credit history.

2. Islamic financing

Islamic financing options, such as Sharia-compliant mortgages, are available for investors who prefer ethical and interest-free financing. These options adhere to Islamic principles, making them suitable for both Muslim and non-Muslim investors.

3. Developer financing

Some developers offer attractive payment plans and financing options directly to buyers. These plans may include extended payment schedules, post-handover payment plans and interest-free instalments — reducing the financial burden on investors.

4. Off-plan payment plans

Off-plan properties often come with flexible payment plans, allowing investors to pay in instalments during construction. This option appeals to investors looking to manage their cash flow while securing a prime property.

What is the step-by-step property buying process like in Dubai?

The process of buying property in Dubai is straightforward and well-regulated. Here’s a step-by-step guide to help you navigate the process:

• Set a budget
• Identify investment requirements
• Choose the right property
• Partner with a reputable real estate firm
• Conduct due diligence
• Sign the MOU
• Pay deposit
• Apply for financing (if applicable)
• Conduct property valuation
• Transferring ownership at the DLD (Dubai Land Department)
• Register property
• Pay transfer fees
• Receive the title deed

Working with reputable real estate agents and property management companies in Dubai can streamline the process and ensure a successful investment experience.

What are the documents one needs to prepare for a smooth transaction?

● Personal Documentation
○ Passport,
○ Visa,
○ Proof of income,
○ Bank statements,
○ NOC from employer (if applicable)

● Property Documentation
○ Title deed/MoU,
○ Property plans,
○ Purchase agreement,
○ Payment proof,
○ Seller’s ID,
○ Valuation report,
○ Property inspection report,
○ Insurance, building completion certificate (for off-plan), Ejari (for rentals),
○ Developer’s NOC

● Financial Documentation
○ Mortgage details (if applicable),
○ Real estate brokerage agreement

Conclusion

With the Dubai 2040 Master Plan underway, the emirate is dedicated to transforming itself into the ‘best city in the world’ over the next two decades. This plan includes enhancing sustainable solutions, boosting investment and ensuring that 60% of the region comprises natural reserves, setting the stage for significant growth.

Dubai’s real estate market in 2024 presents a compelling investment opportunity for international investors. Its strategic location and promising future growth make it a desirable proposition. However, partnering with a local property management service is highly recommended for those entering the international real estate market for the first time.

Investors benefit from crucial support from advisory, execution, monitoring and future resale. Benham & Reeves, Middle East, enhances Dubai’s appeal to global investors by providing top-notch property management services. From post-purchase to property maintenance, management of buy-to-let arrangements and compliance with tax laws, we handle everything on your behalf.

Our experienced agents also assist investors in managing property finances remotely. Engaging a professional property management company for long-term tenancy or holiday rentals is a wise decision for those living abroad or with limited time.

We handle all logistics, paperwork and payments and manage marketing and advertising strategies to ensure a profitable investment. With our support, managing your property becomes a seamless and lucrative experience. Contact our Middle East team for more information and turn your Dubai property dreams into reality.