Is it now the best time to invest in Dubai property?

Dubai has been and remains one of the most attractive regions for real estate investment. Investors return to the emirate to search for properties for sale in Dubai in 2024. Dubai’s continued popularity is largely due to its simple home-buying process, endless stream of expats, and ample opportunities for overseas property management. But is now a good time to invest in Dubai real estate, or should you wait for a more opportune moment?

The situation in the Dubai real estate market

The first step is to study the market to decide when to invest in real estate in any region. It is important to understand how it develops. Let’s consider the situation in the Dubai real estate market and the factors influencing its attractiveness.

High profitability of housing

Investors come looking for good returns, and Dubai has it. The profitability of studio or one-bedroom apartments in 2023 remains at 7% for long-term rentals. The profitability of short-term rentals in popular tourist locations can reach 12-15%. Investors who purchase housing during construction and subsequent resale earn up to 30% of the cost.

Growing number of tourists and expats

Dubai is a metropolis of expats; they make up 90% of the emirate’s population. 2022 was a record year for the number of newly arrived residents. Economic and political crises in Europe are forcing foreigners to look for “safe havens” for life and capital, so the emirate’s long-term rental market will not experience a decline soon. The flow of tourists in Dubai also does not dry out: beaches, vibrant attractions, entertainment centers, and the most bizarre skyscrapers attract more than 14 million tourists a year.

The ambitious Dubai 2040 development program, unveiled by Sheikh Mohammed bin Rashid Al Maktoum, is helping to increase the interest of expatriates, investors, and businesses in the future and offer developers new construction opportunities. According to this program, the number of residents of the emirate should almost double. New areas will be built for residents and tourists, and natural locations will be increased (they will make up an unprecedented 60% of the metropolis); the length of the beaches will also increase significantly.

Security of transactions and infrastructure for investors

Dubai is one of the few megacities with all the conditions for comfortable work for investors. The first thing the emirate authorities took care of was the simplicity and security of transactions. The Dubai Land Department carries out control and registration, and its representatives also participate in remote purchase and sale procedures via video conference.

The authorities also took several measures to protect against long-term construction:

• The developer must purchase the land before building on it.
• Buyers’ money is kept in an escrow account, and the developer cannot use it until the first stages of construction are completed.
• 5% of the cost of the building is retained in an escrow account for another year after completion of construction in case defects are eliminated.

There are other pleasant nuances for investors. For example, in Dubai via AX CAPITAL, you can buy real estate for cash or cryptocurrency, which is almost impossible in European countries. Investors have access to mortgages and interest-free installments. You don’t even have to look for a tenant yourself: in Dubai, developers and property management companies offer these services. An investor can receive income from anywhere in the world.

Investor concerns

Investing now or waiting is the most common question investors ask. Let’s look at a few of the main concerns of those thinking of making money on real estate in Dubai.

“The market is overheated.” Media analysts are often quick to attribute overvaluation to any rapidly growing market. After the global economic shock 2008, investors’ biggest fear was a market crash, especially since there was no panacea for it.

Dubai has experienced declines twice: in 2009 and 2016. The emirate authorities have concluded and taken measures to protect the economy and the rights of developers. Currently, demand in the luxury housing segment in Dubai exceeds supply: authorities also monitor development plans to prevent imbalances. Landlords in Dubai cannot sharply raise rents: they can only be raised once a year and by no more than 15% – this curbs price growth.

Dubai was not included in the list of “soap bubbles” in 2022, compiled by analysts of the Swiss financial holding UBS. This means that real estate in the emirate cannot be considered overvalued. As expected, the growth rate of the Dubai property market has slowed. If in 2021 the growth in the number of transactions was 176% of COVID indicators, then in 2022, this figure was at 76%, and the first half of 2023 showed an increase of 44%. This dynamic speaks of natural progression.

Changes in policy regarding expats and foreign buyers

The profitability of Dubai real estate directly depends on the flow of expats and tourists. If the authorities’ loyalty to visitors changes toward tightening, the consumer will leave the market. Authorities in Dubai understand this very well. Until now, only relaxations have been allowed in migration policy. Expats and investors obtain residency in the Emirates based on work, study, and investment. For the purchase of real estate worth more than $204,000, you can get a resident visa for two years, and with an investment of over $545,000, an investor can count on a “golden visa” for ten years.