What You Should Know About Buying Real Estate in Dubai

What You Should Know About Buying Real Estate in Dubai

Dubai’s real estate market is developing as fast as the city itself. There are places where not just individual houses, but huge developments are being built. Which of these developments are worth the attention of foreign investors and buyers? And where, in general, you should not buy real estate in Dubai — neither for income nor to live in? We’ll consider those questions in this article.

1. Advantages of Buying Property in Dubai

Advantages of Buying Property in Dubai

If you want to buy property in Dubai — to live in, to rent out, to use as a vacation spot or for any other purpose — you should know about the main advantages of owning property in Dubai.

a) High profitability

Rental yields in Dubai average 7% annually. For comparison, here are the average yields in other major cities:

  • New York: 3.91%
  • London: 3.21%
  • Singapore: 2.83%
  • Hong Kong: 2.82%

b) Tax appeal

  • Owners pay no tax on residential property and rental income.
  • There is only a 5% tax on the purchase and rental of commercial property.
  • The VAT rate is one of the lowest in the world.

c) Residence visa

A resident visa is issued upon purchase of real estate valued at $272,000 or more.
There are 2-year and 5-year visas for property owners and their families.

d) Ever-growing population

The population of Dubai has been doubling every 10 years:

  • 2010: 1.5 million residents
  • 2020: 3.1 million residents
  • 2030: expected 6.4 million residents

e) High-tech environment

f) Sustained economic growth

g) Ultra-modern life

h) Security

i) World-class medicine and education

j) Stable currency

k) Center of international finance

l) Reliable investment environment

m) Ease of doing business

2. Popular areas of Dubai among UAE real estate investors

Popular areas of Dubai among UAE real estate investors

Among tenants, the most popular neighborhoods are the following:

  • a) Al Nahda: This Dubai district has undergone extensive residential construction in recent years. Al Nahda consists of two parts: Al Nahda 1 and Al Nahda 2.
  • b) Mirdif: This residential neighborhood located in Dubai consists mostly of townhouses and individual private villas.
    • Uptown Mirdif: The design of this project is inspired by the ancient resort town. The project includes more than 2,000 villas and apartments, playgrounds and recreation centers, a medical center and an elementary school.
  • c) Shorooq: This residential complex consists mainly of three- to four-bedroom villas.
  • d) Bur Dubai:  This historic neighborhood in Dubai is located on the west side of Dubai Bay. The area is home to several mosques and also has many shopping streets and bazaars.
  • e) International City: This residential neighborhood in Dubai will feature numerous residential complexes and retail outlets decorated in the traditional styles of various countries: China, England, France, Greece, Spain, Italy, Morocco, Russia, the UAE and the Persian region.
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  • In terms of the number of sales transactions, the most popular neighborhoods are:
  • a) The Palm Jumeirah: This island located on the shores of Dubai is an artificial island in the shape of a palm tree. It was founded in 2001. It is part of the Palm Islands and is the smallest and most original.
  • b) Arabian Ranches: This is an elite cottage community in Dubai, founded in 2004. It consists of three parts:
    • Arabian Ranches 1, built in a desert theme, includes more than 20 different types of communities.
    • Arabian Ranches 2, built in 2012, consists of 11 rustic-style communities that are to be completed in 2021.
    • Arabian Ranches 3, built in 2019, is a complex with luxury four-bedroom townhouses. It will include a four-kilometer boulevard and several public parks with a large selection of playgrounds for children, as well as recreational and sports facilities.
  • c) Dubai Marina: This neighborhood, founded in 2003, was built around an artificially created bay in the western part of Dubai. There is active construction of skyscrapers, a line for streetcars, shopping at Dubai Marina Mall and two metro stations: Dubai Marina and Jumeirah Lake Towers.
  • d) Downtown Dubai: This large-scale mixed-use complex is under construction. It is home to the city’s major attractions, including the Burj Khalifa, the Dubai Mall and the Dubai Fountain.

3. Property prices in Dubai are getting lower

Property prices in Dubai are getting lower

In luxury areas like Dubai Marina and Downtown Dubai, real estate prices have fallen by about 8%, so buyers who have spare cash can take a chance and get high-end properties at affordable prices.

As for renting a property in Dubai, the biggest significant price reductions were recorded in these communities:

  • Dubailand: One-bedroom apartments were down 9.1% percent in Q1 2021.
  • Dubai Sport City: Two-bedroom apartments were down 8.1% in Q1 2021.

In the villa sales segment, the Palm Jumeirah is still the most popular for home buyers. The Mirdif area is by far the most sought-after area for potential renters.

There has been a slight decline in the value of villas in the areas of Dubailand and Mudon.

The remaining areas are not as popular, but among them are some promising locations. In order to view these unique options, I advise renting a car at Renty.ae. After all, these projects often incorporate innovative ideas that are impossible to implement in developed communities.

4) In what areas shouldn’t you buy real estate in Dubai?

In what areas shouldn’t you buy real estate in Dubai?

New does not always mean promising and good. There are two peripheral areas — Dubailand and International City — where you can buy the lowest-cost real estate in Dubai. In addition to the price, real estate buyers are also attracted by the high rental yields of up to 9%. However, real estate in these areas is illiquid in terms of resale.

And the reasons for this are completely different.

For example, in International City it is usually very difficult to sell purchased real estate due to its low quality and low building characteristics.

In Dubailand, realizing the purchased object is difficult because of the poor infrastructure.

Conclusion

Real estate in Dubai, which includes both residential and commercial stock, high-rises, detached houses and the most modern complexes, is unique. There are huge high-rise buildings and a variety of projects delivered in the shortest possible time. In just a few decades, the desert has become a modern metropolis and one of the most advanced cities in the world.

I’m an interior designer and a blogger. I have a passion for textures, function, and sustainable design. My job is to make your surroundings motivating to be happy. Formally trained in interior design, with a complementary background in construction and custom millwork, adds an experience of understanding of the total design process for each unique project. I am a contributor to Thrive Global and regularly quoted as an expert in large media outlets. Read more >>