I’ve noticed that investing in residential and commercial real estate in the UAE is highly profitable and attracts global investors. According to Rodl & Partner, since the outbreak of COVID-19, the UAE real estate market has seen a significant upturn. The number of transactions has increased sharply, exceeding 60% compared to the pre-pandemic period. This indicates a strong recovery and considerable growth in the UAE’s real estate sector.
From my experience, while individual investment is common, considering a corporate structure for the investment can be advantageous.
In this article, I’ll explore the legal aspects and potential benefits of investing in UAE land, providing insights into why it’s a smart choice for investors.
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UAE Real Estate Key Market Trends
The UAE residential real estate market is expected to register a CAGR (compound annual growth rate) of more than 8% during the forecast period 2022-2027.
Even with the COVID-19 pandemic causing lockdowns and trouble for many industries, the property market stayed strong.
Residential property prices in the UAE have grown, supported by strategic economic reforms and a rapid vaccination campaign. Experts believe these factors played a critical role in accelerating the recovery from the pandemic-induced recession.
The UAE’s residential property sector, which has been struggling with the effects of lower oil prices since 2014, is now experiencing a revival. This resurgence is primarily due to changing housing preferences, with more people choosing larger homes with outdoor amenities. This trend is a response to the growing prevalence of remote work and online learning. Also, the government has been really helpful. They’ve made it easier for retired people and those working from home to live in the UAE, and they’ve made the 10-year visa program bigger, making more people interested in buying property here.
Developers and market experts have noted that 2023 was a positive year for the UAE, culminating in an overall growth rate of 3.5%, indicating the country’s progress in the right direction. The IMF predicts that 2024 will see a further increase in growth, estimated at 3.9%. The UAE’s GDP grew by 2.5% in 2023 and is expected to maintain a growth rate of 2% in 2024. Additionally, the UAE’s population is projected to increase by an average of 2% annually.
According to REIDIN analysis, in March 2023, Abu Dhabi’s residential property sales price Index rose by 0.02 points, from 79.84 to 79.86, marking a 0.02% increase. Year-on-year, prices also increased by 1.23%. During the same time, Dubai’s residential property sales price Index increased by 1.76 points, from 95.89 to 97.65, reflecting a 1.84% rise. Year-on-year, prices surged by 12.75%.
In 2023, the UAE’s property market remained robust, evidenced by a rise in transaction volumes, particularly in Dubai and Abu Dhabi. Recent records show that Dubai alone witnessed 116,116 new property transactions in the first nine months of 2023, amounting to approximately Dh429.6 billion ($117 billion). Overall, property transactions in the UAE saw an annual increase of 33.8%, with values climbing over 36.7% during the same period.
Abu Dhabi’s property market also experienced growth, fueled by rising interest among investors. This upturn reflects the broader positive trend observed in the UAE’s real estate sector.
Why Should You Consider Investing in Land in the UAE?
Let’s bullet point the advantages of buying land in the UAE for investment before we open them up.
- Growth of real estate prices
- Possibility of renting out real estate at a rate of 5-8% per annum.
- No taxes on real estate
- Obtaining Golden Visa
We have already concluded that due to its investor-friendly, tax-free programs, excellent ROI, and established amenities, the United Arab Emirates has grown into a popular location for investors.
The UAE government has simplified investment rules by offering a simplified registration process, low taxation, property rights, and a dedicated property regulator. For example, excellent ROI in Dubai due to premium amenities, well-developed real estate, and infrastructure improvements have contributed to the steady growth of the real estate sector.
I can note that Dubai’s sophisticated infrastructure and upscale communities provide residents with modern conveniences and a pleasant lifestyle. The Golden Visa program, which grants long-term residency permits to eligible investors, ensures long-term stability. The consistently higher interest rates in the UAE’s real estate market have proven advantageous for foreign and local investors.
There is strong anticipation of an increase in the supply of luxury villas and apartments, with developers preparing to introduce around 10,000 new properties in the coming year. In addition, the inflation decline has positively impacted the real estate sector, leading to price stabilization and lower living costs. The expected inflation rate in 2024 will be 2.1%. These factors contribute to the market’s attractiveness when considering purchasing land in the UAE for investment opportunities.
Let’s wrap things up!
Looking ahead to 2024, buying land in the UAE for investment is a compelling opportunity driven by a combination of favorable factors. The statistics show that the UAE is exceptionally stable, providing a secure environment for real estate investment. This stability minimizes the risks and contributes to a favorable investment climate, increasing investor confidence in this market.
The UAE’s economic growth forecasts for the next five years indicate its attractiveness as a property investment destination. Additionally, the increasing population in the UAE has the potential to generate a higher demand for housing and real estate, which could, in turn, result in elevated property prices.
2024 holds promise for property investment in the UAE, with its stability, growth prospects, rising population, and exceptional rental yields making a strong case for potential investors.
What Kind of Real Estate Can You Buy for Investment in the UAE?
When considering the option to buy land in the UAE for investment, it’s essential to emphasize that 2024 presents a remarkable opportunity for investment in Dubai. However, several factors may influence your decision.
Top Luxury Property provides recommendations are:
- Villas
- Apartments
- Penthouses
If you are prepared to purchase, the first step is to assess your requirements carefully. For individuals or couples, options range from studios to one or two-bedroom accommodations. On the other hand, families with children and parents may find a 4-bedroom apartment suitable.
Another crucial aspect to consider is your budget. If you have significant financial resources, you can explore upscale properties suitable for families of four to six members.
If you have uncertainties about the most suitable options in the UAE, the ideal residential area for families, the required booking fees, or any other inquiries, Top Luxury Property is available to assist.
Off-plan or Secondary Market Investment
Off-plan properties have grown in popularity recently, but it is important to understand the advantages and disadvantages of these properties before deciding to buy land in the UAE or make an investment.
Off-plan properties are typically more affordable than those in the secondary market, allowing buyers to purchase at a lower price. Investors also stand to gain from capital appreciation as the area around the property develops. Developers often provide attractive payment plans for off-plan property purchases, adding to their appeal. Buyers have the added benefit of flexibility and control, customizing aspects like fixtures, fittings, and design. Additionally, off-plan properties are brand new, ensuring they are in excellent condition.
However, there are drawbacks to off-plan properties. One significant disadvantage is the delay in rental income. Since these properties are under construction, they can’t be rented out immediately, leading to a potential wait of several years before generating rental income.
“Off-plan sales for the first 3 quarters of 2023 totaled Dh100 billion and ready-homes sales for the period reached Dh104.9 billion, according to Knight Frank’s report in November.”
Financing is more accessible for secondary properties, as buyers can usually obtain long-term mortgages, spreading the cost over many years.
Conversely, secondary market properties are generally more expensive than off-plan properties because they are already constructed and ready for occupancy or rent. Additionally, since these properties have been previously lived in, they might require maintenance or modernization, factors that should be considered when evaluating such an investment.
Frequently Asked Questions
Yes, foreign investors can buy land in the UAE. The government has implemented laws allowing foreigners to own freehold property in designated areas.
The UAE real estate market is known for offering substantial returns on investment, thanks to the country’s economic growth, increasing population, and demand for real estate.
The UAE offers strong legal protections for investors, including property rights and dispute resolution mechanisms, ensuring a secure investment environment.
Investors should consider the location, development potential, and legal regulations of the land. It’s advisable to conduct thorough research or consult with real estate experts before making an investment decision.
Conclusion
In my view, the UAE’s real estate market stands out as a solid and appealing choice for investment needs. The resilience of the market, combined with enticing incentives such as tax advantages and the Golden Visa program, catches investors’ attention. Additionally, the high standard of living in areas like Dubai only adds to its allure as an investment destination. As I look towards 2024, I’m optimistic about the continued growth and prospects of the UAE property market, making it an intelligent choice for the investment portfolio.
