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An expat’s guide to Dubai real estate market

What comes to your mind when you think of Dubai? Luxurious lifestyle, skyrocketing buildings, larger than life malls, and happy people. Dubai is all of it. It is one of the most flamboyant and chic cities in the world.

Since shifting its focus from oil to tourism, infrastructure developed by leaps and bounds, new projects transfigured the city beyond recognition. It was then that Dubai gifted the world Burj Khalifa, Dubai Mall, The Palm, to name a few. 

Together with being one of the top tourist destinations, Dubai has established itself as one of the most developed real estate markets. With governmental support, Dubai has become a top real estate market for investors, foreign nationals  mainly. 

So what is it that attracts investors from all over the world to invest in Dubai real estate market?

Why should you consider Dubai as your investment destination? 

There is no doubt that Dubai is an attractive destination for people from all over the world. But why expats prefer to live and invest in Dubai? Main reasons are-

• A Stable economy 

• The governments interest and encouragement of Dubai real estate market 

• Continuous boost in the infrastructure of the city.

• Speaking of Dubai’s real estate market situation– it shows one of the highest Return of investment 8%-12%, beating New York’s 5%. 

Apart from the above benefits of investing in Dubai real estate market, it is also ranked as one of the safest cities in the world. 

When we talk about Dubai real estate investments it is important to show who are the main investors. 

According to one of the latest DLD(Dubai Land Department) reports, Emirati nationals have emerged atop investors in Dubai real estate market with the total value of 2,986 real estate transactions of AED 6.8 billion.

Indians following Emirati investors, showing 3,218 transactions with the total worth of AED 5.9 billion.

Saudi residents closing the list of top 3 Dubai real estate investors with investing AED 3.7 billion through 1,415 investment transactions.  

The list of top 10 investors by nationality  included Britain, Pakistan, China, Egypt, Jordan and France. 

What are the benefits of investing in Dubai real estate?

Investments in Dubai real estate market were always profitable for expats, more so today. The  government of Dubai has implemented rules and regulations with the aim to attract more foreign investors and provide more benefits for them. The restructuring of rules include –

• A 10-year visa for investors

• Allowing funds and REITs(Real estate investment trusts) on the Dubai Financial Market 

• Reducing fines and providing payment plans to expired business licenses stimulation of businesses by releasing AED 14 billion in the form of visa deposits

• Allowing many businesses to own 100% of their shareholding

• 6 months visas for people looking for work opportunities

• Freeze on school fees, etc. 

The main goal of the government is to provide a favorable environment for investors looking at the Dubai real estate market.

Which are the most preferred areas of investment in Dubai?

Main focus of investments in Dubai real estate market has shifted from luxurious properties to economic ones. Less developed and slightly distant areas from the downtown have started attracting larger number of investors. 

One of the most popular areas for international investments is Dubai Sports City. Sports City is sports complex that’s perfect for the most active people in Dubai. 

Considering Dubai real estate market conditions and declining prices, a Dubai Sports City Apartment could result in up to 9.17% of rental returns annually. Price-wise, the value of the properties has declined over the past 6 months by 1.90%. 

Next in popularity is Dubai Silicon Oasis. It has a pretty vibrant neighbourhood too, complete with restaurants, supermarkets and more. With a rental yield of 8.66% YTD. This might also be the right opportunity to purchase a property here as prices have slashed by 3.58% over the past 6 months. 

International City became one of the most attractive destinations due to its design – country-themed architecture. Despite being far from the downtown, this area remains a hotspot for investors.

Jumeirah Village Circle (JVC) and Jumeirah Village Triangle (JVT) are very well located – relatively close to Dubai Marina and downtown. Although these areas are still under development, they still attract investors with reporting 8.45% YTD rental yield.

Future Forecasting 

Reckoning all favorable conditions for development, the population in Dubai is growing every year. According to the latest statistical data provided by GMI(Global Measures International), the total population of UAE is 9.54 million people, of which Emiratis 11.48%, Pakistanis 12.69%, Indians 27.49%, Filipinos 5.56%, Egyptians 4.23% and 38.55% of other nationalities.

Numerous projects, Expo 2020 and overall enhancement of Dubai economy will attract more expats and increase investments in Dubai real estate market.


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Real Estate types that suit every kind of investor

Investment is a forever trending topic and smart people have made millions by playing the game right. As we talk about people making millions, we cannot ignore the ones losing millions. Were they just unlucky or did they lack strategic approach? Successful people however have several theories, unfortunately what worked for one might fail for others. There are no set defined rules to get rich.

As more and more investors sense a market crisis in the world economy and lose their moolah, they have shifted focus on more safe and stable options without compromising on ROI. This is where Real Estate comes into the picture. Now, I know Real Estate does not make you rich overnight but it doesn’t make you poor in one night either and I’m sure that the majority of the experts will agree with me that Real Estate is the perfect balance between risk and returns.

Real Estate investment Types 

There are several ways that one could slice and dice real estate types, but I prefer to group them into different categories at different levels. The first is the high level residential and commercial segregation. Many others add a third category called projects or off plan or primary at the first group level itself. But to me, it makes sense to add this as a category at the second level along with ready or secondary category. In the residential group you could have furthermore categorization like apartment, villa, etc. and in the commercial group you could add retail, office, warehouse, etc.

Let’s look at each type in detail and which type of investor do they suit.

Ready Units 

Investing in ready units be it commercial or residential is for those seeking immediate returns in the form of rentals. One could also re-sell by buying at a low price and selling it at a high price, but such a scenario requires that the buyer holds on to his asset for a while for the prices to appreciate a little. In few other lucky cases some buyers are able to sense a distress sell by an owner and they grab such situations with all limbs. These types however have low capital appreciation situations and are suitable for those who are risk averse.

Commercial Units 

The simplest examples of commercial real estate are office spaces, retail stores, and warehouses. These are usually more expensive than residential units if you look at them from a per square feet basis but they typically generate higher returns than residential units. Commercial type has its pros and cons against residential type but for whatever reasons isn’t so popular with the Dubai people. Investing in offices & shopping centers could be more effective & profitable if done right. What you have to keep in mind is that commercial real estate involves re-registration of electricity and paying certain charges to the government.

Off-plan investments 

Off-Plan has many names including primary and projects. This type can bring much more income than the secondary market. This is because the prices of the off-plan properties are much lower compared to ready units. Ergo, if you invest in real estate at the plan stage you can get the best or lowest price that project will sell for and as the project makes progress in its construction the price only keeps getting higher. I’ve seen the same project unit jump up in price within 6 months of project start and there will be ample cases which have done better.   

The biggest risks with off-plan investments is the developer risk and project selection risk. If you pick the wrong developer or a wrong project of a good developer (even the best developers make poor choices in selecting some projects) then you are in eternal doom. The developer could go bankrupt or the project is sold at a very high price from the plan phase itself by creating a hype about it. The hype does not last long and the buyers are stuck with an overpriced product.

How do I Choose which type to invest in and when?

Investing in Real Estate requires a thorough knowledge of all types and the market you are investing in. The great thing about Dubai is that the government has taken impressive steps to secure the investment of every person, especially in real estate. If you follow the simple economic principle of supply and demand then Dubai will have a shortage of supply since the growth rate of population in Dubai is higher than rate at which ready properties are entering the market for occupancy.

Making the right investment choice to maximize your returns will require expertise in real estate sector and knowledge of the past, current and future market trends. A good property investment advisor can make this journey for you both peaceful and profitable.