Investment opportunities in Dubai, UAE

There are dozens of prosperous real estate markets on the planet, so what makes Dubai a better place to buy a house, apartment or any other piece of property?

Traditional vs. emerging markets

Most people traditionally invest in strong European, American or Asian markets, as they offer stability and security. If your goal is to protect your money from devaluation by transforming it into a solid asset and you don’t care about expenses, then this is your choice. However, if we compare gross rental yields in different cities around the world, it becomes obvious why investment opportunities in Dubai attract many capital owners.

For instance, gross rental yields in London vary from 2.6 to 3.5 per cent, according to Numbeo’s data. In Singapore, you can expect to earn up to 3.2 per cent of the purchase price a year. It’ll be even lower in Tokyo (2.3 per cent) and a bit higher in New York (almost 6 per cent).

Such figures are regarded as quite typical for mature markets, but as you can see, one cannot expect high income. Alternatively, developing markets feature considerably higher gross rental yields. In Dubai, one can expect up to 11.42 per cent per annum. There are three main reasons why:

  • lower sales prices in the city;
  • the same or similar rental prices;
  • higher population growth rate.

Although maturing markets are yet to stabilize in rental and sales prices, one can make a lot of money while the demand for property there is still growing – both by renting it out and reselling.

What type of property is better?

Although there are lots of investment opportunities in Dubai, you should choose depending on your circumstances and plans for the future.

Buying a hotel apartment is a very popular type of investment, particularly very convenient for foreigners who are not going to move to Dubai. Managing a piece of property isn’t easy – but it turns into a living hell when you try to rent out your overseas property! However, hotels are operated by managing companies usually under world-renowned brands. In other words, this is a ‘buy-and-forget’ investment. With Dubai’s boosting tourism numbers, investing in a hotel is a good choice.

Buying an apartment or villa is an easy way to get good rental income, but only if you are going to stay and work in Dubai, as managing it from abroad is way more difficult. Although this type of investment is very popular around the world, be prepared to face certain difficulties such as looking for tenants, settling disputes, paying charges, making repairs, etc. On the other hand, purchasing an apartment in Dubai isn’t difficult, while the growing population promises high demand on your property.

Buying an office is another alternative in case you want to stay in Dubai, but unlike the two mentioned above, both purchasing and managing it requires more skills and work, as well as expenses.

Taxes

Another factor determining the benefits of investing in Dubai real estate market is the city’s easy tax terms. In most spheres, you don’t have to pay any taxes. The owners of commercial property including hotel apartments will have to pay only 10 per cent tax on profit.

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