The United Arab Emirates remains one of the most sought-after destinations in overseas real estate investment. The real estate market here is flexible enough and adjusts to the buyer: you can find an apartment for tens of millions of dollars, and a studio for a hundred thousand.
The emirates today are an island of adequacy in the global community. The real estate here is built very quickly, and the demand for it is great. All this moves prices up.
Investors in the UAE are attracted by high profitability and turnover: with investments of 20-40% of the full value, most of the facilities can be resold at the construction stage, and retain the terms of installments. The average return for investors is about 20% per annum, and the return on invested capital, when the apartment is resold during the construction process, is even higher – from 30% to 50%, depending on at what point and under what conditions it was possible to find a buyer for the facility.
Dubai and Abu Dhabi attract the most investors. According to recent research, Dubai is not an overvalued market. It’s quite saturated, but it keeps growing if you choose the right object. This is well confirmed by the recent case from the investment fund Maerli Capital: The facility was bought in December 2022, and for four months the increase in the price was about 40%.
Abu Dhabi today is like Dubai 5-6 years ago: there are many promising sites in this Emirates and infrastructure is developing very rapidly. According to Abu Dhabi, experts predict an increase of up to 100% on average and up to 200% on individual objects in the next three years.
It is important to choose the right objects for investment. As everywhere else, the UAE has both highly overestimated objects and those that are at the start. What are the possible strategies?
It is important to know: due to the availability of installments, many try to enter the market with a minimum threshold when you can pay only 10% of the cost plus a tax of from 2% to 4% and continue to make payments several times a year.
It’s a big mistake, and there is no need to do that. After all, if the investor miscalculated his forces and as a result could not pay on schedule, then the apartment will have to be urgently resold, or all deposited funds will be lost.
Residential or Commercial Property
For commercial real estate, there are a number of restrictions and rules that complicate investment. Dubai is divided into so-called free zones. To rent commercial property in a specific area, you need to register a company there.
British law applies in the UAE. Everything that is nominated in dirham and is located on the territory is quite strictly regulated by the legislation. If the property is located in the territory of the Emirates and the person bought it completely legally, no questions may arise. The Arabs will not allow their property market to be shaken, there are no legal prerequisites for this.
There are now moves to expand inheritance laws. For expats, it is not Muslim rules that begin to apply, but the international law of inheritance, when you can normally write a will and even inherit real estate without a will.
Broker services in the UAE for customers are free: agents earn on contracts with developers, not on buyers. Developers in the Emirates operate without marketing costs, and advertising budgets are directed to broker commissions.
The advantage of working through brokers is that the developers always give the best conditions, and the agents are well aware of the situation in the market and can tell the investor the best option.