Is Dubai a good property investment?

4 min read

Ever thought about buying property in Dubai? Would it be a good investment? What are the benefits of buying property in Dubai?

Let’s look at the basic reason for buying real estate in any part of the world. Of all the products that you can buy, real estate is the most precious and obsolete one. Why? Because no more land is being produced in the world. This earth is the only piece of land that we have, and before someone else buys the portion that you like, why not purchase it yourself?

Buying property as a family home

Over the course of the last few years, Dubai’s real estate market has become very mature, with many affordable housing projects being launched. The question is, can you buy property in Dubai and make your monthly mortgage payments? The answer is yes. If you are a salaried person making a minimum of Dh 15 000 per month, you are eligible to apply for a mortgage. A recent client, who was renting an apartment in Dubai Silicon Oasis (DSO), has now bought her own apartment, and the monthly mortgage payment is almost equal to the monthly rent that she was paying for her previous apartment.

If you  buy a property to live in yourself, these are the considerations to bear in mind:

Family-friendly neighbourhood: Since the beginning of its development, Dubai has been a family-friendly city. Every community in Dubai is well designed and planned. In every community you will find public parks, supermarkets, leisure spots, nearby shopping malls and cinemas, etc.

Cleanliness: Dubai definitely knows how to keep its streets and communities clean all the time. For instance, thousands of people use public transport on New Year’s Eve and all gather in downtown Dubai to witness the biggest fireworks show from the tallest building in the world, aka Burj Khalifa. Yet you won’t find a single piece of tissue paper on the streets in the morning.

Basic infrastructure: Dubai has excellent healthcare, educational and recreational facilities. There is a widespread network of medical centres, public and private hospitals, and the city also boasts the best schools and colleges, as well as major international universities that have established their campuses there.

Transport: All major communities in Dubai are well connected and covered with the public transportation network. The main commuter service is Dubai Metro, a driverless train/tube service.

Security: Dubai is no doubt one of the most secure cities in the world. Dubai police are famous for their law and order maintaining skills, and due to strict regulations, Dubai is also very safe from outside threats.

Buying property as a holiday home

Holiday homes make up a thriving property market in Dubai. The favourite destinations for these are Palm Jumeirah, Dubai Marina, Jumeirah Beach Residence and downtown Dubai (Burj Khalifa district). Buying a holiday home in Dubai comes with many perks:

Get a resident visa: One of the benefits of buying property in Dubai is that you can get a resident visa. The property value should be equal to or above Dh 1 million to qualify for UAE resident visa. If you are a frequent visitor to Dubai, having your own resident visa is very beneficial as it allows you unlimited entries and exits from UAE until its expiration date. The visa can be renewed at the time of expiration.

No tax on your property: Property investors don’t pay government taxes on that property. So you are not compelled to rent your property to cover that expense, and it can be available to you every time you visit Dubai.

Sunny all year round: Dubai’s weather is sunny most of the year, with a few days of rain. The sunny beaches of Dubai are usually within walking distance of your property, and are a great source of leisure.

Lots of activities:  Dubai has the world’s largest shopping mall (Dubai Mall), and the tallest building (Burj Khalifa), as well as countless other attractions. The city also has a buzzing nightlife. You can go for night safaris or hit any nightclub of your choice.

Buying property as an investment

This is the biggest reason why people buy property in Dubai or any other part of the world. Buying property in Dubai actually secures your future. It is the best way to park your funds and let them grow while you enjoy the benefits of yearly rental income should you choose to rent your property.

Here are the factors that make a strong case for Dubai as a property investment opportunity:

Property in Dubai costs less:  Compared with other real estate capitals around the world, Dubai is much cheaper. According to the Global Property Guide, London costs USD 2 208 per square foot, Hong Kong comes in second at USD 2 119 per square foot, New York is third at USD 1 719 per square foot, followed by Singapore at USD 1 417 per square foot. The average property price in Dubai is just USD 468 per square foot, six times less than London.

No property tax: The absence of property tax is the single biggest benefit of buying a property in Dubai. Let’s say you have USD 500 000 to invest in real estate. If you were to purchase a property in Hong Kong, the tax rate would be 15% of the purchase value, 13% in Singapore, 2.33% in London and 2.21% in New York.

Dubai offers higher rental yields: None of the major cities (London, New York, Hong Kong, Singapore) come close to the rental yield offered by Dubai. According to the Global Property Guide, Hong Kong offers just 2.82% return on your investment. Singapore has an average rental yield of 2.83%, London comes at number three with a rental yield of 3.21%, and New York offers an average rental yield of 3.91%. Dubai is number one, with a conservative average rental yield of 5.82%. In certain areas of Dubai, the rental yield goes above 10%.

So is buying property in Dubai a good investment? The answer is a big YES!

Saad Arif

Dubai Real Estate Consultant and Analyst
www.saadarif.net