Real estate investments in the UAE

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Many call Dubai the city of the future. It was founded just under two hundred years ago and continues to develop. Millions of tourists fly here annually. Even during the 2020-2021 pandemic, the UAE was visited by 12.6 million people. And by 2031, it is planned to increase the tourist flow to 40 million people per year. This shows how promising real estate investments in the UAE are, as all these people will need somewhere to stay.

Who, why, and for what purpose buys real estate in Dubai

As statistics from last year show, Russians are actively buying real estate in Dubai. According to data from the Betterhomes report, in 2022, more than 86 thousand real estate transactions were registered in the emirate, which set a record. Prior to this, the largest number of real estate contracts was recorded in 2009 - 80 thousand. Only in Dubai in 2022, real estate worth 56.6 billion dollars was sold, which exceeded the 2021 figure by 80%. Analysts note that this became possible due to the migration wave of Russians seeking stability.

Following citizens of the Russian Federation, residents of the United Kingdom most often buy real estate, followed by Indians, Italians, and French. Previously, residents of China actively bought real estate in the emirate in whole buildings for cryptocurrency, but due to the tightening of immigration policies in the PRC related to the coronavirus, the movement of Chinese people around the world has decreased.

Investments in Dubai real estate are motivated by various reasons:

  • Buying an apartment worth more than 205 thousand dollars in the emirate can grant resident status (for two years);
  • No bank deposit can boast such a high return. Investments are justified also by the fact that the market is not overheated;
  • Despite its popularity, Dubai remains relatively inexpensive in terms of real estate. You can buy four times more property there than for the same amount in New York;
  • The country has a fairly lenient tax policy. Although taxes will still need to be paid when renting out purchased property, if the apartment is registered to a company. There is no income tax on renting out personal property.

These four reasons become the main ones for foreign investors.

Real Estate Market in Dubai

Dubai is an amazing city where the majority of the population consists of expatriates. There are many tourists, businessmen, and job seekers. Not everyone can afford to buy property. That is why rental apartments and flats are so popular.

Moreover, square meters in the UAE steadily appreciate, which not only preserves investments but also multiplies them. The Real Estate Regulatory Authority (RERA) establishes and monitors compliance with the rules in the real estate market. The regulator takes into account the peculiarities of real estate and creates equal conditions for different investors.

Cost of Real Estate in Dubai

It is most profitable to invest in under-construction housing, as the initial deposit ranges from 20 to 80% without overpayment. In the UAE, it is called off-plan. The most affordable price per square meter among popular areas of Dubai is in Meydan City, where it costs just over five thousand dollars. An apartment there will cost around $450,000. Next is the Dubai Hills area, with the cost per square meter around five and a half thousand dollars, and an apartment will cost about $550,000. A square meter is a thousand dollars more expensive in Business Bay. The most expensive real estate is in Blue Waters, Palm Jumeirah, La Mer, and Downtown.

Yield and Return on Investment in Dubai Real Estate

In Dubai, there is real estate of various price categories. The cost of some lots reaches hundreds of millions of dollars. At the same time, there is an average and budget segment of the market in the city. In a new district of the emirate, you can buy real estate cheaper than on the outskirts of Moscow.

However, if you do not intend to live in the purchased apartment, you can make money on it. The UAE is a tourist country where income from this industry accounts for about 10% of GDP, so square meters are always in demand here. Real estate can be rented out, providing a stable income. The average yield of an object in Dubai is 7-15% per year.

The constant increase in real estate prices speaks in favor of investing in it. For example, if at the beginning of 2014 the average price per square meter was less than $3,000, then nine years later (at the beginning of 2023) it had grown to $3,700. Now the average price is 1.3 times higher than in 2014.

Benefits of Real Estate in Dubai

The main reason why foreigners buy real estate in the emirate is the opportunity to obtain a residency visa. If you adhere to the program requirements, you can get a golden visa in just a month. This is a kind of equivalent to a permanent residence permit, allowing you to stay in the UAE for up to ten years. Both the investor himself and his family members can obtain residency by purchasing property worth $550,000 or more.

In addition, buying real estate in Dubai has other advantages:

  • High demand drives up prices and investment returns;
  • The government keeps the market under control, so all transactions are safe;
  • Many properties are rented out annually in the city, so there is a large assortment of offerings;
  • Banks provide mortgages to foreigners.

But buying real estate is a responsible step, especially when it is in a foreign country. Therefore, it is important to weigh all the pros and cons. In particular, it is necessary to understand that the UAE is a Muslim country with people of a different mentality. Therefore, foreigners sometimes find it difficult to get used to the norms of local life. Nevertheless, living in Dubai is comfortable, as it is home to people of different nationalities and cultures.

Conditions and Specifics of Buying Real Estate in Dubai

A foreigner can buy or rent real estate in the UAE. The first option allows ownership of property until it is sold or gifted. There are areas in the city where investments are permissible in both ready and off-plan properties.

Rules for purchasing real estate:

  1. A preliminary contract is drawn up, specifying the address and cost of the lot. Additionally, the document outlines the obligations of the parties and the payment procedure. If it is housing in a building under construction, the completion deadline and penalties for delays should be specified.
  2. Preparation of a sales contract (contract). It reflects the advance payment (often 10% of the purchase amount). Typically, this is a refundable deposit, but if the investor rejects the contract terms, the seller may retain the right to the money. If the owner decides not to sell the property, they return the deposit in double.
  3. Applying for a No Objection Certificate (NOC). The NOC confirms the parties' commitments. Processing takes no more than five days, but both the buyer and seller must be present personally.
  4. Transfer of ownership rights. To do this, you should go to the Dubai Land Department, where a check for payment for the property will be issued. After the required amount is paid, the investor receives a property ownership certificate.

Such a sequence of actions makes the investment safe.

What to Consider When Buying Real Estate in Dubai?

Before buying property in the UAE, you should understand why you need it. To obtain a profitable object, attention should be paid to the choice of location, surrounding infrastructure, building type, and its area.

For investments, it is important to:

  • Determine the type of property – house, apartment, flat.
  • Choose an area with suitable infrastructure.
  • Select a developer – developers offer various conditions, and it is also necessary to check if the developer has a certificate from the Land Department.
  • Evaluate the project – familiarize yourself with how the property and the entire area will look after completion of construction.
  • Choose the floor and area of the premises.
  • Study the contract, with particular attention to the obligations of the parties.

If done correctly, the investment will be profitable.

Investment Potential of Real Estate in the UAE

Experts from various countries speak about the prospects of buying real estate in Dubai. However, an ordinary buyer may not always understand and assess the market's potential. The future profitability of investments can be determined by indirect signs, such as road congestion.

Nobody likes traffic jams, but they are a direct indication of population growth in an urban area. Last year was a record year for Dubai International Airport, which served 66 million people. This is an incredible figure, considering that the growth compared to 2021 was 127%.

Urban planning specialists say that increasing traffic is a direct indication of city growth and development. In other words, investments in such a situation will always be successful.

An example of this is Al-Khail, Hessa Street, and Umm Suqeim. These streets were calm just a few years ago. However, today there are many new houses here, which has put pressure on the road infrastructure. Those who invested in these streets have already earned up to 40%.

Why it is important to turn to large licensed companies

There are many unscrupulous individuals in the real estate market. In pursuit of maximum profit, they disregard professional ethics. Because of such intermediaries, a shadow is cast over the entire industry, as clients are left with a negative impression of cooperation.

Moreover, buyers themselves, in an attempt to save money, often refuse the services of intermediaries, trying to buy property directly from the developer, even though brokers are paid by the developer, not the client (if we are talking about off-plan properties). However, any seller will only present their property in a positive light. At the same time, agencies will provide objective information about the property. Additionally, large companies have established partnerships with developers, so they can offer lower prices for real estate, making investments even more profitable.

Often, real estate purchases are influenced by emotions. But to achieve high returns on investment, it is necessary to soberly assess the situation. This can be facilitated by an impartial person – an employee of a licensed company.

All of this speaks in favor of cooperation with The Level Consulting. Our advantages include a team of experts and years of experience in opening bank accounts, tax and accounting services, providing legal services, and processing all necessary documents. We always work towards results, finding the optimal solution for each of our clients.

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