Dubai and Abu Dhabi have become some of the world’s most important destinations for international real estate buyers. With a wealth of investment opportunities and a favourable regulatory climate, the emirates have witnessed a huge increase in demand for residential and commercial properties alike, in turn stimulating significant new development projects.
In addition, Expo 2020, much-delayed after the COVID-19 pandemic, has facilitated even more interest in the country’s real estate market.
Q1 2022 saw the Dubai real estate market register its best quarter since 2010, with a total of 20,539 sales transactions valuing around AED 55.5 billion. Abu Dhabi has also had a strong showing over the same period, with around 3,300 transactions valuing more than AED 11.3 billion overall.
WHAT MAKES THE UAE SO ATTRACTIVE FOR REAL ESTATE INVESTORS?
Part of the answer yields in the guaranteed return-on-investment. Property prices are on the increase, and yet they are lower per square foot than in many other global cities. Properties nevertheless offer high rental yields of between 5 and 9%.
Buyers in Dubai and Abu Dhabi also face a welcome choice between buying off-plan or ready properties.
Buying off-plan (that is, a property upon which a structure is yet to be built) is becoming an increasingly popular choice in the UAE, offering a higher potential return-on-investment and a significant price advantage when compared to “ready” properties. However, ready properties usually provide immediate returns, and stable rental yields.
Another reason is that the UAE has recently relaxed its visa rules, making them more amenable for both first-time investors and experienced buyers. These new rules, implemented in April 2022, make obtaining golden and silver visas for real estate investors much easier.
GOLDEN VISA, GOLDEN TICKET: WHO IS ELIGIBLE FROM A REAL ESTATE PERSPECTIVE?
The UAE’s coveted golden visa has become essential for international real estate investors. It’s a long-term residence visa that makes it easy for individuals to live and work in the country without the need for a sponsor.
All that’s required is a AED 2 million property investment – that’s just around USD 540,000. That relatively low barrier-to-entry means it’s easier to get hold of a golden visa than ever before.
The benefits to investors are clear:
- It’s a ten-year renewable residency
- You don’t require a sponsor or even an employer
- The visa isn’t cancelled if the holder leaves the country for an extended period
- It can cover family members including children, with no age limit
- In the event of the death of the visa holder, family members can keep their golden status until it expires
- The initial entry visa is valid for six months until the golden visa is processed.
Since a change to the regulations in April 2022, obtaining a golden visa has become fairly straightforward, providing even more opportunities for foreign investors to gain a foothold in the UAE. An investor simply needs to meet one of the following criteria:
- Buy a property or a share of a property with a value of at least AED 2 million
- If the property is mortgaged, paid at least AED 2 million of value to the bank
- Share ownership of a property with a husband and wife
- Purchase a property with a loan from specific local banks
- Buy one or more off-plan properties of no less than AED 2 million from approved local real estate companies
Developers can offer payment plans that enable a buyer to qualify for a golden visa with an investment as low as a downpayment of 10% without a mortgage (AED 200,000) and 25% with a mortgage (AED 500,000), lowering the barrier to entry even further.
WHICH NATIONALITIES ARE INVESTING IN DUBAI AND ABU DHABI?
Overseas real estate investment in Dubai remains the province of the Europeans, with British, Italian and French investors among the top ten nationalities. UK buyers took the number one spot.
But growth is coming from all four corners of the Earth. According to Zoom Property Insights, Canadian buyers increased by 116 per cent during the first quarter of 2022 when compared to a year earlier.
In addition, investors from India, Pakistan, China, Lebanon and Russia, as well as neighbouring countries such as Saudi Arabia and Kuwait, have also made significant inroads in Dubai, with Russian buyers increasing by 65 per cent as they look for lucrative investments outside their home country.
Analysts expect foreign interest to continue to grow and broaden, thanks to the UAE’s economic stability, rapidly-growing property market, safety, and openness to international business.
REAL ESTATE CHALLENGES AND TRANSPARENCY
Local authorities and prospective investors will be buoyed by the news that the real estate markets of Dubai and Abu Dhabi have been recognised as the top global improvers in 2022, according to JLL’s latest Global Real Estate Transparency Index.
Dubai, in particular, has entered the “transparent” category for the first time, thanks to new lending regulations, ownership tracking, sustainability reporting, and enhanced digital services and data provision such as service charge management, automated valuations, and transactions databases.
Digital services have also been a boon for Abu Dhabi, which, although remaining “semi-transparent”, has benefited from improved sales and lease management, and development and transaction databases.
The report also highlighted challenges regarding Environment, Social and Governance (ESG) requirements, as well as privacy, security, and data management. These are global issues that Abu Dhabi and Dubai must contend with to maintain the confidence of international investors.
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