Why You Should Invest in Dubai Real Estate Market in 2023
May 11, 2023
Dubai is one of the world’s fastest-growing economies. Characterized by a stable economy, warm climate, and strategic location, it is a hub of international trade and commerce. This results in an ever-increasing demand for real estate.
From vacation homes and apartments to villas of wealthy businessmen expanding their trade to the UAE, Dubai is a prime location for investment in the real estate market thanks to the alluring ocean, desert destinations, and all-year-round warm climate.
5 Convincing Reasons to Invest in Dubai Real Estate Market in 2023
This article looks at 5 reasons why one should invest in Dubai.
Dubai has experienced one of the most successful economic recoveries post the COVID-19 pandemic — the real estate market is one of the beneficiaries. The volume of properties sold recorded a 128% year-on-year increase (9,800 sales transactions in January 2023). As for the value of the transactions, the same month set the bar high — the rise of 178% (almost $8 billion). With the ongoing growth in the Dubai real estate market, now is the prime time to invest in local premium real estate.
High Rental Yields
When it comes to rental yields in Dubai, the average rent and sale prices for residential property increased by approximately 19% and 12% in 2022, respectively. The top 5 areas in Dubai with high rental yields include Dubai Marina (7.04%) and Jumeirah Village Circle(6.9%).
Compared to other popular cities like Ottawa, with an average rental yield of 4.6% and New York at 5.8%, it's safe to say that investing in the real estate market in Dubai has promising returns on investments.
In the USA, when it comes to property taxes, as an investor, you can expect to pay even up to 2.5% of the property cost yearly, depending on specific state law. However, this is not the case in Dubai, as the country does not impose any tax on real estate properties. Rather the state charges a 4% transfer fee from property transactions as the main form of generating revenue from the property.
Additionally, Dubai charges tenants a municipality tax. This tax is 5% of the annual rent for residential tenants and 10% for commercial tenants. The municipality tax, though charged annually, is broken down into monthly installments for ease of payment — the minimum amount payable is AED 450 ($122.5) yearly.
Perfect Conditions for Foreign Investors
Dubai has set the scene to offer foreign investors the perfect conditions for investment in the country. Here’s how:
English Is the Second Most Spoken Language in Dubai
Investing in the Dubai real estate market will not require you to learn Arabic. English is also widely spoken. Most locals and all ex-patriate are fluent speakers of English. Besides, Dubai has gone a step further in easing communication for foreign investors by ensuring all major communication tools and points that you will interact with, such as hotel names, signboards, maps, and even instruction catalogs are written in both English and Arabic.
Stable Exchange Rate Between the UAE Dirham vs U.S. Dollar
The UAE Dirham is considered one of the world’s most stable currencies. Since 1997, it has maintained a steady exchange rate with the U.S Dollar of 1 USD to 3.6725 AED. This stability means that as a foreign investor, you can be assured of no drastic changes in the exchange rate. It guarantees the performance of your real estate in Dubai as projected, if not better.
Designated Freehold Zones
In its bid to encourage foreign investments in the country’s real estate, Dubai has established what is known as freehold areas. Foreigners can purchase land and enjoy absolute interest in the land there. Furthermore, in the sale of a freehold property in Dubai, consent from the state is not required, which means there will be less paperwork to complete the transfer of full ownership of the property.
Whether you choose to live, lease, or rent this property, the land forever remains yours and for your generations. Should you choose to sell the land, you can legally do so as a foreigner in Dubai.
10-Year Residence Visa
Foreign investors in Dubai are eligible for a special type of residence that does not require regular renewal as it is up to 10 years. When you invest in the Dubai real estate market in property valued at a minimum of AED 2,000,000, you can enjoy a 10-year residence visa.
Besides, the visa will not be canceled even when you leave Dubai for years. It also covers your family members, and should you pass away, they will continue to enjoy the residence visa benefits in Dubai until it expires. Some of these benefits include access to health insurance, government health services, visa-free access to several countries, etc.
Possibility to Buy Property for Cryptocurrency
Dubai has set the foundation to become the world’s crypto capital. The country has passed its first law governing virtual assets and formed an independent regulator for the cryptocurrency sector. In addition, sectors have begun accepting payments in cryptocurrency with leading Dubai developers, such as DAMAC Properties and Nakheel, setting the precedence in the real estate market. You can now invest in the real estate market in Dubai using Bitcoin and other cryptocurrencies as long as all legal requirements are met.
Dubai offers multiple opportunities to reap big in its real estate market — from off-plan properties to waterfront real estate, budget-friendly properties, and commercial properties. At the end of the day, wherever you choose to invest in Dubai’s real estate, profit is guaranteed, and the better the location, the higher the profits.