Advantages of Buying Property in Dubai

Planning to invest in real estate but can't decide which country to choose? Read here about the advantages of buying property in Dubai in 2023.

08.05.2023
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buying Property in Dubai

Dubai is one of the best cities in the world for expats

According to research done by CBRE Group, Inc., in 2022, over 90,000 deals for renting and buying residential properties were closed in Dubai. This number increases every year. Expats are increasingly buying property in Dubai for several reasons: the high level of safety, the developed infrastructure, the possibility of obtaining residency status, and that there is no property purchase or sales tax. Real estate in the UAE is also a profitable investment tool, as the value of apartments increases alongside growing demand. A residence can be resold at a higher price or rented out for stable passive income.

Every year, more and more foreigners move to Dubai. The authorities expect that by 2040, 5.8 million people will be living in the emirate. According to Euronews.travel, in 2022, the number of residents in Dubai already exceeded 3.5 million. This trend is contributing to the growth of demand for real estate rentals and purchases.

Four reasons why Dubai has become the best city in the world for expats:

  1. High level of security. Dubai is the seventh safest city in the world. According to Numbeo.com, the safety index here is 83.7 out of 100. Interestingly, the leader of the ranking is an equally famous metropolis of the UAE, the capital city of Abu Dhabi, with an index of 88.3.
  2. Developed infrastructure. Dubai is a modern city with an excellent transportation system. The metro, which was launched in 2009, already had 53 stations by 2023. Other major cities in the UAE can be quickly reached via the key Sheikh Mohammed bin Zayed Road highway. In addition to the main types of public transport, there are also monorails and water taxis here. The authorities of the metropolis are working to turn Dubai into a city with climate control. By 2040, a separate, covered road will be built that connects most of the emirate, and allows only foot and bicycle traffic. In addition, Dubai has created all the conditions for a comfortable life. A whole district dedicated to medical care, Dubai Healthcare City, has been launched in the city. It has about 80 hospitals and clinics accredited by JCI, which provides the highest quality healthcare services. For shopping enthusiasts, there is a huge selection of modern shopping centres, the most famous being Dubai Mall, Mall of the Emirates, and Dubai Hills Mall.
  3. Centre of global events. Dubai regularly hosts international events that attract millions of people, such as the Annual Climate Change Conference, CRYPTO SUMMIT 2023 and Leisure Show Dubai 2023.
  4. Opportunities to start a business. The government actively supports entrepreneurs who open a business in Dubai. Until June 2023, legal entities were not required to pay income tax, and VAT is still only 5%. For comparison, this figure reaches 19% in Germany and 20% in the UK. In 2023, the Global Entrepreneurship Monitor recognised Dubai as the best city in the world to start a business in for the second year in a row.

Top 6 advantages of buying property in Dubai

Listed below are the undeniable benefits that are availble to investors interested in buying property in Dubai.

Opportunity to obtain an investor visa

The United Arab Emirates has a foreigner-friendly residence visa program. One way to obtain resident status is through investing in real estate. By purchasing property worth at least AED 750,000 (USD 204,000), you can apply for a two-year visa. To obtain a ten-year Golden Visa, you must invest at least AED 2 million (USD 545,000) in UAE real estate. Resident status allows you to permanently reside in the country, open bank accounts and businesses, use local healthcare services, and provides many other privileges.

Important! Dubai is the most popular emirate among investors; it is where most of the freehold zones are located, and a huge amount of residential and commercial real estate is being built.

High Investment Profitability

Real estate prices in Dubai are steadily increasing. In February 2014, the average price of an apartment per square foot was AED 963 (USD 259), but as of February 2023, it had increased to AED 1,250 (USD 343). Over 9 years, the cost increased by 30%.

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No Property Tax

Real estate owners in Dubai do not pay an annual property tax. They only need to cover the cost of housing maintenance, which is calculated individually.

Taxes are only collected when real estate is bought or sold and amount to 4% and 2%, respectively, of the value of the property. If the owner decides to rent out their property, they need to pay a tax of 5% of the average rental price in that specific area.

Affordable cost

Dubai is one of the most attractive cities for real estate investments, primarily due to the absence of property tax. The average cost per square foot of apartments in the centre of the emirate is about AED 1,389  (USD 378). For comparison, the cost per square foot of apartments of the same class in London is, on average, AED 4,904 (USD 1,333), which is 3.5 times more expensive.

High Rental Income

Tourists, entrepreneurs, and freelancers regularly visit Dubai, which is why there is high demand for property rentals. The average annual cost of renting a one-bedroom apartment in the Dubai Marina area is AED 110,000 (USD 30,000). In Downtown Dubai it is about AED 130,000 (USD 35,400), and in Business Bay the cost is around AED 90,000 (USD 24,500). The annual rental income in these areas reaches 6-7.5%.

One of the most popular areas in Dubai to buy or rent villas and townhouses is Dubai Hills Estate. As of 2022, you can rent property here for AED 114,500 (USD 31,200) per year, and the return on investment is approximately 12.1%.

Freehold Property

There are numerous freehold zones in the emirate, and foreigners can open businesses and purchase real estate with 100% ownership rights in these areas.

Important! There are over 40 freehold zones in Dubai. As of the fourth quarter of 2022, the most popular areas to purchase property were Business Bay, Al Merkadh, Dubai Marina, Jumeirah Village Circle, Palm Jumeirah.

How can we help?

Metropolitan Premium Properties was founded in 2008. We currently have 56 expert agents who altogether speak 18+ languages and have all the up-to-date information about the real estate market in the UAE. Our company is an accredited broker of the country's leading developers and a laureate of annual awards for the best brokerage agencies. This allows us to have access to the most advantageous and exclusive offers on the real estate market of the Emirates.

We are ready to help you buy, sell, or rent your residential and commercial properties, manage your property, and arrange mortgages with major banks in the country. Our specialists provide consultations on investing and obtaining dual citizenship in the Emirates and assist in resolving administrative and legal issues for clients residing in the UAE.

FAQ

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Why is Dubai called a unique metropolis?

Dubai emerged onto the global radar only in the second half of the 20th century, but over these past few decades, has transformed into one of the most modern metropolises in the world. A large number of expats live here, and they make up the majority of the city's population. Dubai has harmoniously united many cultures, languages, and religions and has become a true paradise for entrepreneurs. The city's authorities actively support business development and do everything possible to attract even more professionals.An interesting fact: the Burj Khalifa is located in Dubai and holds the record for the world's tallest tower.

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Does Dubai's real estate market have a promising future?

Demand for real estate in the emirate is growing, thanks in part to the increasing number of tourists and expats who regularly rent and buy apartments and villas here. Compared to 2021, the number of rental property contracts signed in 2022 increased by 11% (source in Russian). It is also important to note that the metropolis is actively developing: in 2022, more than 42,000 residential property units were put into operation.

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What are the benefits of owning property in Dubai?

Real estate in Dubai is constantly increasing in value. If you decide to sell your residence after a few years, you will not lose money; in fact, you will make a profit. Additionally, apartments or villas can always be rented out, and the rental yield in this case can reach as high as 10%.

Acquiring property in Dubai makes you eligible to receive a 10-year Golden Visa, which allows you to do the following: bring your family and even domestic staff to the emirate, obtain an Emirates ID, obtain a driver's license, open accounts in UAE banks, make international transfers, receive treatment in high-class Emirati clinics, and enter the country even if the borders are closed to tourists. The Golden Visa can be renewed indefinitely as long as you still own the property.

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Can a foreign citizen purchase property in Dubai with 100% ownership?

A foreigner can purchase property with 100% ownership in one of Dubai's special zones known as a freehold zone. In other areas of the emirate, private residential properties are exclusively available to citizens of the country.

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The citizens of which countries invested the most in Dubai real estate in 2022?

In 2022, the main investors in Dubai real estate were Russian citizens, which is primarily due to the geopolitical situation in the world. Citizens of the United Kingdom and India round off the top three buyers.

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How many residential properties are there in Dubai?

As of the end of 2022, there were approximately 700,000 residential property units in Dubai.

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How many new properties were delivered in 2022?

In 2022, Dubai developers delivered approximately 42,000 new property units.

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What are some interesting facts about real estate in Dubai?

  • The real estate market in Dubai is regulated by RERA, the regulatory body of the emirate's Land Department. It also controls how real estate agencies operate, the trust operations of developers, lease agreement registration, and more.
  • Every lease agreement in Dubai must be registered in the state system, Ejari.
  • There is a separate court in the emirate that deals with settling disputes in the real estate industry.
  • On the Land Department of Dubai (DLD) website, you can track the progress of a residential property under construction.
  • The emirate uses a central air conditioning system, as the outside temperature exceeds 95°F (35°C) for most of the year.
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    Marina Mikhalenko

    Senior Property Consultant – Metropolitan Premium Properties

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    36-38 Floor, Al Salam Tecom Tower, Dubai, UAE
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    Marina Mikhalenko

    Chief Real Estate Investment Expert at Metropolitan Premium Properties

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