Complete 2023 Guide.

Dubai Property Investment

Property Investment Dubai: Why Invest In 2023?

For many real estate investors, the Middle East offers a compelling a solution.

And while there are many locations in the Middle East providing active housing markets, there is perhaps no better city in 2023 than Dubai property investment.

With higher than average rental yields, and less property taxes than somewhere like the UK, property in Dubai is fast becoming a hot commodity on the global stage.

But is property investment in Dubai and the United Arab Emirates (UAE) the right choice for you in 2023?

You can find out in this Dubai property investment guide. Here, you’ll learn:

  • Why invest in Dubai 2023?
  • How to invest in Dubai
  • Can a foreigner buy property in Dubai?
  • How to find Dubai Investment opportunities in 2023
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Why Invest in Dubai 2023?

Dubai property investment is one of the most attractive investment opportunities in the world.

With no property taxes in Dubai and far cheaper prices than other global locations, real estate investors can make an exciting investment in Dubai in 2023.

Perhaps the biggest benefit Dubai property investment has over other global locations is that there are no property taxes in Dubai.

Taxes can eat away profits like no other, with those buying property in the UK subject to stamp duty, income tax, capital gains tax, amongst others.

However, Dubai is a ‘no tax’ emirate, as the city doesn’t need to rely on taxation to fund services, thanks to the wealth gained from oil and trade.

Although there are other expenses to think about, including a monthly housing fee and a fee to the Dubai Land Department when transferring property, these pale in comparison to the amount of taxes payable in countries like the UK.

As such, Dubai is one of the cheapest locations for property investment, especially when you compare it to some cities like Sao Paulo that see property taxes as high as 30%.

In fact, a report in 2017 found that Dubai had the second-lowest rate of property fees compared to 15 other major cities from across the globe. Factoring in the level of returns available (more on that later) and you’ll see just how impressive a property investment in Dubai can be.

Alongside a lack of property taxes, Dubai’s real estate market is also thriving thanks to its affordable property prices.

Despite its international reputation as one of the most luxurious and premium cities in the world, Dubai is far cheaper than the likes of Manhattan and London.

In a report from The National News in November 2021, the average house price in Dubai was recorded at AED 1,235 per square foot, or $336.28 per square foot.

In comparison, the price per square foot in Manhattan was a whopping $2,152, while London was a more reasonable, yet still expensive, $769.82.

As such, Dubai properties are some of the most affordable out of any major global city, making real estate investments in the area more accessible than you may first think.

There’s plenty of room for a real estate investor to get both commercial properties and residential properties, with high demand for both, making Dubai an ideal hotspot for a long-term investment.

Thanks to low property prices and no significant property taxes heavily impacting profits, Dubai has some of highest rental yields in the world.

According to Property Monitor, average gross investment yields can reach as high as 8.59% in the city, with the Global Property Guide estimating an average yield of 5.19%.

For comparison, this is far higher than the likes of New York, Paris, London, Tokyo, Hong Kong, and Beijing, which offer gross yields below 3%.

As such, if you’re looking for a global mega city with attractive rental yields, a property investment in Dubai may be the perfect solution in 2022.

Capital growth, otherwise known as capital appreciation, is one of the most vital metrics used by investors to decide if a city is worth an investment.

By finding a city with huge capital growth potential, real estate investors could earn hundreds of thousands of dollars worth of profit in the future depending on the property type and market performance.

Interestingly, Dubai has shown some incredible price growth in 2021 after suffering heavily from the impact of Covid-19.

A report by The National News found that the average residential property price in Dubai increased by a whopping 21% between January and October 2021, representing the fastest growth since 2014.

In fact, according to The First Group, Dubai’s property market is now one of the world’s hottest, with the highest recorded property price growth compared to 53 other countries.

Thinking Of Buying UK Property?

Read our complete guide to help you get started with your UK property search.

Why Shouldn’t You Invest In Dubai In 2023?

While Dubai sounds like a dream investment in 2023 thanks to the capital growth and rental yields on offer, there are some drawbacks that you need to be aware of.

Property Market Performs Poorly in Times of Uncertainty

One of the greatest reasons to invest in property is that it can perform well during economic pressure.

While it is by no means immune to economic collapse, history points to real estate outperforming stocks in times of uncertainty.

Take Covid-19, for instance, in somewhere like the UK. While the stock market suffered its worst crash since 1987 in March 2020 (when Covid first hit the west), UK property prices only dropped by £2,000 (over $2735).

Fast forward to December 2021, and the UK just recorded its highest-ever average property price of over £254,000 (around $347,400).

The reason we bring this up is that Dubai has had a difficult past when it comes to economic recessions. Looking back at the financial crisis of 2008, Dubai was one of the worst hit locations in the world, with many locals and expats fleeing the country due to an overnight collapse of the economy.

This is mainly because of the lack of diversity in its economy, with Dubai heavily reliant on certain sectors.

While this doesn’t necessarily mean you should avoid investing, it is certainly something you should keep in mind, as you could encounter some short-term losses caused by a future recession.

Lower Rental Demand From a Smaller Population

The iconic Dubai skyline paints a city overflowing with people, however this is not the full story.

While impressive corporate skyscrapers make up the bulk of the city skyline, the city’s population is quite small.

According to government data, the population of Dubai is estimated to be just over 3.45 million. For comparison, London is said to be almost 9 million.

This has a significant impact on occupancy rates, with InvestAsian stating that residential occupancy rates in Dubai are 30 to 40%.

Although this could seem damning, it’s important to acknowledge that real estate is a long-term investment, especially in a city like Dubai that is constantly growing.

Between 2019 and 2020, the population of Dubai increased by 55,300. Along with rising property prices, it seems that property investment in Dubai is rising in effectiveness and popularity.

Dubai Property Price Predictions 2023

Following a very successful 2021 for the Dubai property market, that saw 48,651 sales valuing Dh.177.44 billion, the busiest it has been in eight years according to the Dubai Land Department, the future looks bright for Dubai in 2023 and beyond.

2021 represented a 38.34% year-on-year growth in transactions and a 63.4% rise in total value, and the DLD is confident this growth will continue at least to 2023/24, according to a report from the Economic Times.

According to a recent survey reported in the same Economic Times report, property prices are expected to rise by an additional 2.5% in 2023.

While this growth prediction isn’t as high as the UK market, where UK-based Savills anticipate a 3.5% rise in 2023, it’s still an incredibly impressive growth that could easily be surpassed when considering the level of growth seen in 2021.

What is the Best Area for Property Investment in Dubai?

Like every real estate investment, location is vital for a successful investment.

This is especially true in Dubai, with the city having large regional variations in house prices, return potential, and rental demand for residential properties and commercial real estate.

While there are over 45 distinct areas of Dubai, not all of the investment areas are equal, with some stand out locations in 2023.

Check below for the top five prime locations for real estate investment in Dubai 2023.

Discovery Gardens

Surrounded by everyday essentials, Discovery Gardens is one of the most popular family friendly neighbourhoods in Dubai.

Significantly for investors, Property Monitor has estimated you can expect average gross rental yields for apartments in Discovery Gardens of 8.59%.

This is thanks to incredibly low prices of just AED 479 per square foot, making it one of the most affordable locations for property investment in Dubai.

Remraam

Another incredibly affordable residential area, Remraam is highly rated thanks to stunning views, low traffic and noise levels, with excellent nearby transport links.

Despite these benefits, Remraam apartments are valued at just AED 510/sqft on average, helping to generate massive gross rental yields of 8.44%.

International City

A combination of tourist attractions, businesses, and residential property, International City is an incredibly popular destination.

With low property prices of just AED 435/sqft, you can expect yields of 8.24% in the area – making it a top choice for Dubai investment property.

Dubai Investments Park

Following the same trend as the other locations on this list, Dubai Investments Park is another incredibly affordable investment location.

Prices here are valued at AED 553/sqft for residential apartments, with villas coming at a slightly higher price per square foot of AED 675.

As such, yields are impressive, at 7.54% gross on average.

Dubai Studio City

Slightly more expensive than Dubai Investments Park with only slightly worse yields, Dubai Studio City is an incredibly popular area for businesses.

Apartments here fetch for about AED 649/sqft on average, with high rental returns of 7.50%.

Honourable Mentions

While these cities offer the best average rental yields according to data from Property Monitor, it doesn’t mean they are the only places worth investing.

Some more of the best places to invest in Dubai property include:

  • Palm Jumeirah – 5.84% average gross rental yield for apartments.
  • Downtown Dubai – 5.54% average gross rental yield for apartments.
  • Jumeirah Village Circle – 6.50% average gross rental yield for villas.
  • Dubai Marina – 6.00% rental yields for apartments.
  • Business Bay – 5.23% yields for apartments.

All these areas can still make an impressive investment if you have the funds available.

Be sure to speak to a professional financial advisor to help decide which area is perfect for you and your investment goals.

Download 2023 Property Investment Guide

How to Invest in Dubai in 2023

When making a Dubai investment, as a foreigner or resident, there are some things you’ll need to know.

Below you’ll find information on some of the latest real estate regulations, the types of properties you can consider, and an explanation of the Dubai house buying process.

Can a Foreigner Buy a Property in Dubai?

Yes, foreign buyers can buy property in Dubai. However, foreign investment isn’t permitted in every single area, with a foreign property investor able to purchase properties in designated leasehold and freehold areas.

Do You Need a Property Investment Visa Dubai?

You don’t need a resident visa to buy property in Dubai, but you can get one depending on how expensive your Dubai property investment is.

If you buy a completed freehold property, i.e. not off plan, you can get a renewable residential visa.

  • If the Dubai property is AED one million or above, you can get a 3-year renewable visa.
  • Investment property in Dubai that is AED five million or above can get a 5-year renewable visa.

How to Buy Property in Dubai

Buying property in Dubai is a simple process, and will be very similar to process seen in the UK.

  1. You find a property.
  2. You place a formal offer, which is typically via an estate agent.
  3. Once the offer is accepted, you’ll then pay a 10% deposit.
  4. Following the deposit, you will pay a transfer fee and estate agent fees.

However, what you may not be aware of is off plan property, which is far more common in the UAE, and has a slightly different buying process than already built properties.

Off Plan Property Investment in Dubai

Off plan property is property that hasn’t yet been completed but is available for purchase.

This is very common in the Dubai property market, as the area is constantly growing and expanding with fresh investment every year.

However, buying an asset that hasn’t been completed is obviously very risky, and this can seem extra challenging if you’re investing in Dubai from overseas.

As such, it’s vital you complete your due diligence to see if the developer behind the project is reliable. To do this, you should contact the relevant authorities to discuss the developer and the project before you consider putting a down payment and buying off plan property.

Depending on the emirate you invest in, you may need to pay for the property on a regular basis until completion.

You’ll also need to pay a premium, which is a percentage of the original property price and a transfer fee.

Pros and Cons of Off Plan Properties

Pros
  • Off plan properties are available at a lower price than already built properties, which acts as an incentive to invest in a riskier asset.
  • Due to the lower price, capital appreciation potential is even higher.
  • Through developer payment plans, you could be able to pay for your property in increments, which could make the process cheaper for you.
Cons
  • Depending on how reliable the developer behind the project is, you could face delays in construction, which means you’ll have to wait even longer before seeing returns.

Interested in buy to let mortgages in Dubai? Read more on our guide here.