1. Dubai is a leader in foreign investment
Dubai ranked third among the leading FDI (Foreign Direct Investment) locations for the future in 2021, indicating a high level of investor confidence in Dubai. The city's investment appeal is mainly due to its safety, quality of life, and global connectivity.
2. High average returns from real estate
Dubai's real estate can yield up to 9%, which is significantly higher than what most global markets can offer at the moment. At the same time, the price of luxury real estate here is several times lower than in other metropolises, such as New York, Hong Kong, and Geneva.
3. No property tax
Considering the fact that UAE does not impose a property tax and has no plans to do so, it is not surprising that in 2021 Dubai registered the highest annual volume of real estate transactions (AED 300 billion, USD 82 billion) in its history, despite the COVID-19 pandemic and travel restrictions.
4. The number of deals and the average price of the property are increasing
4. Since the beginning of 2022, the cost and sales of residential properties in the UAE have been steadily increasing: the total volume of real estate transactions has increased by 67%, and the average check has increased by 168%
Analysts at Zoom Property Insights also note the rise in Dubai real estate prices. According to their report, apartment prices have increased by more than 8.5%, and villa prices - by 13%.
Analysts at Zoom Property Insights also note the rise in Dubai real estate prices. According to their report, apartment prices have increased by more than 8.5%, and villa prices - by 13%.
5. People actively rent housing here
In October 2022, the Land Department in Dubai registered 53,756 real estate rental agreements. Of these, 60% were new contracts, the remaining 40% were renewal contracts. 70% of the deals were for residential property rentals, and 30% were for commercial property rentals. 90% of tenants signed a one-year contract
6. The state has a development plan, the main task of which is to further increase the number of foreign investments
Dubai has announced an economic development plan for the next decade worth $8.7 trillion, which is set to double the size of the city's economy and rank it among the top three most developed in the world, reports CNBC.
Future transformation projects:
Future transformation projects:
- increase in foreign trade to 25.6 trillion dirhams from 14.2 trillion dirhams over the past decade;
- almost doubling annual direct foreign investments to 60 billion dirhams per year;
- increase in government spending from 512 billion dirhams over the past decade to 700 billion in the next;
- increase in private sector investments from 790 billion dirhams over the past decade to 1 trillion in the next;
- providing 100 billion dirhams in annual contributions to the economy from digital transformation projects.
7. They will start selling alcohol
At the beginning of the year, Dubai announced the cancellation of a 30% alcohol tax, which seems to have been done to stimulate tourism and business.
8. Population growth
The population growth in the United Arab Emirates averages 5 to 8% per year over the last few years, which is one of the highest rates in the world. In 2012 - 7.6 million people. By 2023 - 10.7 million people. By 2033, Dubai's population will be around 16 million people. Population growth is mainly provided by foreigners coming to live and work in the country from all over the world. The growing population supports stable demand for real estate, making it attractive for investment.
9. The state invests in the infrastructure of the real estate sector
The Dubai government is actively investing in infrastructure development and the construction of new districts. Projects such as Dubai Creek Harbour, Dubai South and Dubai Hills Estate offer a wide range of real estate objects, including residential complexes, commercial real estate, and luxury hotels. These infrastructure projects ensure the growth of the real estate market and create new opportunities for investors.
Comparison of UAE with neighbours and global leaders, their ability to cope with real estate market crises
Saudi Arabia
Saudi Arabia has the largest economy in the Middle East and is one of the largest oil producers in the world. It has also faced the impact of global crises in the real estate market. While Saudi Arabia has taken a number of measures to develop real estate, it largely depends on revenues from oil resources. This can make it more vulnerable to oil price fluctuations and global economic crises.
Oman
Oman is a country with a small economy based on revenues from the oil industry, tourism and fishing. Oman too has faced the challenges of global crises, and its real estate market has also experienced fluctuations. However, compared to Dubai, Oman may have more limited resources and opportunities to overcome crises in real estate.
London, United Kingdom
London is one of the world leaders in the field of real estate. The city has become an attractive place for investment due to its historical value, high demand for real estate, and stability of the legal system. However, London has also faced crises in the real estate market, such as the financial crisis of 2008 and the subsequent decrease in demand and prices for real estate. The emergence of Brexit also affected the market, causing uncertainty and changes in the investment climate.
New York, USA
New York is the largest city in the USA and a global financial center. The city is known for its high real estate prices and attractiveness for investment. At the same time, New York was not independent of global crises in the real estate market. The financial crisis of 2008 led to a fall in house prices and a reduction in construction volumes. It is also worth noting that the COVID-19 pandemic in 2020 also had a significant impact on the New York real estate market.
Hong Kong
Hong Kong is a world leader in real estate and financial services. The city is known for its high housing prices and real estate in general. However, Hong Kong has also faced challenges and crises in the real estate market. In particular, economic and political factors such as the influence of the Chinese economy and protests in 2019 have affected demand and prices for real estate in Hong Kong.
Why Dubai Managed Better:
- Economic Diversity and DiversificationDubai is actively developing various sectors besides real estate, providing a more stable economic base. This allows the city to deal with crises without being entirely dependent on one industry
- Government RegulationThe UAE and Dubai governments take active measures to manage and regulate the real estate market. Legislative and regulatory mechanisms ensure transparency and stability in the sector.
- International Appeal and InvestmentDubai has become an international hub for investors, entrepreneurs, and tourists. A favorable business environment, attractive investment opportunities, and quality infrastructure help attract investment even during periods of economic crises. This ensures steady demand for real estate and contributes to market development.
- Flexibility and AdaptabilityExhibits high flexibility and the ability to adapt to changing market conditions. The city responds quickly to changes and strives for constant innovative development, which helps it effectively deal with the challenges of crises.
- Tourism and HospitalityDubai successfully develops its tourism sector, offering a wide range of entertainment, luxury hotels, and world attractions. Tourism is one of the key factors ensuring steady demand for real estate and strengthening economic resilience.
Overall, Dubai in the UAE has coped better with global crises in the real estate market thanks to its diverse economy, effective government regulation, appeal for investment, adaptability to changes, and tourism development. These factors contribute to sustainable development and allow Dubai to stand out among other countries in the region.
Lesson learned? :)