7 Reasons to Invest in Dubai (and 3 Things to Consider)
May 28, 2023
From a small city in the desert, Dubai has grown to become a buzzing metropolis that 3.7 million people from over 200 nations call home. As a major commerce and financial hub with a strategic position in the Middle East, real estate investors from across the globe are turning their attention to this tiny desert enclave in search of high yields and capital appreciation.
In this blog, we’ll outline the key reasons why Dubai makes an attractive investment proposition - along with 3 things you should consider when making an investment decision.
7 Reasons to Invest in Dubai Property
No / Low Tax Environment
One key benefit of Dubai that keeps people from around the world investing and settling in Dubai is its attractive tax regime. There is no personal income tax or capital gains tax. Corporate tax is only 9% for any annual profits over $100,000 US. This makes Dubai an extremely attractive place for high earners and entrepreneurs to base themselves over the long term.
Diversified Economy
Contrary to what many think, Dubai is not reliant on oil as its primary industry (unlike its bigger neighbour, Abu Dhabi). Instead, the Emirate has put significant resources into creating a diversified, stable economy that can succeed through economic cycles.
Tourism is one of the major industries and the government has created a safe and attractive environment for tourists to visit - from abundant 5-star hotels to world-class restaurants, attractions and events. The biggest airport in the world, Dubai World Central, is currently under construction.
Technology is also a key industry, with recent years seeing an influx of venture capital and some standout successes such as Careem (acquired by Uber for $3.1b). Additionally, Dubai International Financial Centre acts as the Middle East and Africa headquarters for many leading finance houses, banks and consultancies and the rapidly growing Business Bay area is home to an increasing number of companies from a variety of industries.
Careem and Uber
Real Estate Visas
By investing in Dubai real estate, property investors can be granted one of several different renewable visas, given them the right to reside in Dubai. These range from a 2 year ‘Real Estate Investor Visa’ to a 10 year ‘Golden Visa’, The Golden Visa gives the holder and their family the right to live, work or study in the UAE for 10 years and a host of other benefits.
Strategic Location
Dubai’s location and coastline make it a major hub for trade between Europe, Africa and Asia. Jebel Ali in Dubai is the 9th busiest port in the world, the busiest in the Middle East and the largest man-made deep water harbour in the world. Jebel Ali is so critical to world trade that its associated freezone is home to 8,000 companies from over 100 countries.
Jebel Ali Port
Currency Stability
Dubai’s currency, the Emirati dirham (AED), is pegged to the value of the US dollar. This means its value fluctuates up and down according to the value of the US dollar. Because the US dollar is seen as one of the world’s most stable currencies, this currency page gives many overseas companies and investors confidence to invest.
Security, Safety and Cleaniness
Dubai’s crime rate is extremely low and public safety is a key priority of the Dubai government in order to attract and retain citizens from around the world. The police are well-funded and responsive. A low tolerance of petty crime means that families and visitors feel safe, and major crimes such as murders sit at a fraction of other countries (e.g. as of 2023, the murder rate is less than 10% of that in the US). For multiple years in a row, Dubai has been voted the cleanest city in the world.
Dubai 2040 Vision
Dubai 2040 is a government initiative and urban master plan to grow the Dubai population by more than two times to 7.8 million by 2040 whilst making it the best city to live in on earth. With direct support of the Sheikh, 5 new urban areas will be developed, hotel areas will increase by 134%, public beach space will increase by 400% and more. With this government support, and a track record of successfully building a world city, it’s likely Dubai will become an even more popular global destination over the coming decades.
Dubai Police
Things to Consider
While Dubai is an attractive proposition for investors based on the reasons above, it’s important to be fully informed. To balance out the positive, here are several topics to consider during your decision-making process:
Developer Risk
Though it’s rare, there have been instances in the past when properties have been purchased off-plan from unproven real estate developers who have gone bankrupt before construction has finished. This has caused the investors to lose all their investment. It is therefore essential to only invest off-plan with reputable developers and investors should work with a company that can provide them with history on a project’s developer before they choose to make a purchase.
Supply / Demand Dynamics
As a young city that has experienced explosive population growth over the past 3 decades and increasing velocity of construction, if immigration were to slow there is a risk of oversupply of accommodation in the market, which would lead to a price decline. For this reason, it is again important to prioritise areas where strong fundamentals would ensure long term desirability and price growth.
Funding Requirements
In Dubai, if you are unable to pay a debt - like a mortgage - you can be charged with a criminal (not civil) offence. If you withdraw from an off-plan purchase before handover, the developer is entitled to compensation - meaning you could lose all of your contributions to-date.With this is mind, it’s critical to invest within your means and ensure you are able to repay any mortgage or payment plan installments.
Downtown Dubai
Summary
Overall, Dubai’s market has many factors working in its favour as a destination for local and overseas real estate investors. A strong economy, business friendly tax regime, gateway location, 2040 masterplan and safe surroundings all underpinning the market, there is a good opportunity to make profitable investments over the coming years. However, there are essential considerations around the exact project, location and financing which must be taken into account before making a decision - ideally with an expert by your side.
How can PropertyData help you?
At PropertyData, our team of specialists can provide the unbiased data and guidance you need to make an informed Dubai property investment decision. For a free consultation, you can get in touch on hello@propertydata.ae, +971 543 112 456 or WhatsApp.
