Since the onset of the foreign property ownership decree in 2002 – ushering in the fabled Gold Rush of foreign investors – Dubai real estate has been a portfolio staple for many investors.
Investors have seen, and benefitted, from sustained periods of double-digit capital growth and witnessed the creation of a robust and strong rental market.
Now, the emirate is home to one of the strongest post-pandemic economies in the world and continues to offer investors a very real possibility of some of the highest real estate returns on Earth.
Furthermore, the Dubai property market is well matured and respected across the world, with investor confidence in both the resales market and the off-plan markets backed by high demand and robust regulation.
If you’re buying from overseas or are new to the market, it is important to recognise the process of buying property in Dubai and know your rights.
The Dubai Land Department (DLD) is the authority where sales transactions and registration of property and land are conducted and recorded. Some of the near 30 services (and over 200 sub-services) the DLD provides include title registration and licencing of real estate professionals to operate in Dubai.
As an investor, you can also find the latest market information on the DLD website too, which is helpful for getting a broad, but official idea of valuations and current market trends.
The Real Estate Registration Agency (RERA) is the other major authority operating in the Dubai property market. This official body takes a more prominent role in the regulation of the market and ensures it remains a world-leading investment environment for all stakeholders.
It is the aim and responsibility of RERA to monitor the financial and technical details of all development projects as well as enforce the compliance of developers, brokers, and other licensed real estate professionals.
As we shall touch on below, the investment performance of Dubai real estate is reason enough to acquire assets, and indeed many investors own property in the emirate while living elsewhere. However, you should be aware that investors in residential properties in Dubai are granted a shortcut for legal residency too – a perk that has become more valuable post covid and has actually helped increase demand for properties in Dubai further.
In 2002 the Dubai real estate market declared itself open to the world. In the first few years following the onset of global investment, the market recorded growth of 162%. Few real estate markets anywhere in the world, at any point in history, have earned higher returns for investors.
Since then, the market, like most others across the world has enjoyed further periods of growth, and it must be said, some quieter times too. So, what about now? What can investors expect?
The Dubai market broke a 12-year record last year. Even in a market with a history of record-breaking performance, it was notable growth. Now, as we enter H2 of 2022, the Dubai market is booming once more. However, unlike past growth phases, investor sentiment for the long term is more positive – there is a feeling the market demand is more robust, the economy more diversified, and the growth more sustained.
The first quarter of 2022 recorded 20,000 property transactions in Dubai. It’s a figure that represents the highest volumes ever recorded from January through March.
Some investors at the very high end of the luxury market have seen assets rise in value by almost 60% in the past 12 months. Although those figures represent the apex of the market, strong returns can be found throughout – and most forecasts predicted further growth for the coming years.
As well as geographical location, the main decision you need to negotiate when investing in Dubai is what property type to acquire. The market is defined by the 2 major asset types: apartments and villas.
Of course, every development has its own specifications, but in Dubai, you can expect studio apartments to comprise approximately 360 sq. ft. of floor space, while one-bed apartments and two-bed apartments represent around 790 and 1,600 sq ft respectively.
Apartments are usually found in one of the hundreds of skyscrapers in Dubai particularly in the Marina and Downtown regions. They tend to be easier to let due to their popularity among the young ex-pat population in Dubai.
Conversely, the other type of residential property in Dubai is the villa, which is favoured by the growing number of families looking to relocate to the GCC region. Villas usually range from three to six bedrooms and can be found in purpose-built and often gated communities. Square footage usually ranges between 2,000 and 6,000.
You can see more about the relative investment performance in our 2022 Dubai property market update, but currently, there is strong demand for both villas and apartment assets. Although the lower-entry point of apartments means they usually always account for the majority of transactions and investors seem most focused on apartment acquisition, it is actually the villa market that is offering the strongest growth.
Average capital appreciation of residential property in Dubai over the past 12 months
As you’d expect from a city-state home to 3.5 million residents, and a property market that is both mature and thriving, the property market is nuanced and location is an important determining factor in the success of any new investment.
There are many sub-markets that appeal to investors. We’ll highlight some of them here, but feel free to talk to us about the investment potential of any area within Dubai.
Home to the Burj Khalifa – the world’s tallest building – and Dubai Mall – one of the biggest shopping malls (and certainly one of the most glamorous) – Downtown Dubai has been and remains one of the emirate’s property hotspots.
Here you’ll find many apartments on the market and there is a healthy mix of completed and off-plan opportunities.
There has been a huge increase in demand for property in downtown Dubai over the past 12 months, with transaction volumes increasing by around 170%. There’s been growth to match too, with an average capital appreciation of over 10%.
One of the most mature sub-markets in the whole of Dubai, the marina is very favoured among new and existing investors.
You can find both spacious villas and plenty of apartment units among the waterside hotel bars and shopping malls of Dubai Marina. The median price per sq footage of an apartment in the marina is AED 2,300. There have been over 3,000 apartment sales in the marina this year, which is an increase in demand of 35%.
Although the vast majority of transactions in the sub-market are apartment units, if you did want to acquire a villa in Dubai Marina, expect the price per square foot to be around AED 1,500. Last year, investors saw growth of around 13%.
You’ll find Business Bay is situated very close to Downtown Dubai and is located on the banks of the AED 3. 7 billion Dubai Water Canal. It’s a very central location and is well equipped for both businesses (as it’s name suggests) and luxury living.
You will find prices in Business Bay notably lower than those in the neighbouring Downtown region. This lower entry point makes it very appealing to first-time investors looking to acquire property in Dubai. That said, there are very prominent trends in Business Bay property market at the moment. The market is heavily weighted to apartments and last year saw a huge amount of property change hands – over 3,500 transitions. This slight over-supply has taken it’s toll on the off-plan market slowing growth over the last year, although completed properties still delivered a 6% rise in capital values.
The iconic man-made archipelago is one of Dubai’s hottest property markets right now.
Both apartments and villas on the Palm have always been in demand and have represented stable and profitable investments for many years, but in a post-pandemic market, the Palm has become even more sought after. Both investors and new high-net-worth residents have competed for the more spacious properties on the Palm and this has resulted in some incredible year on year growth.
Average capital values have increased by 45% in the past 12 months across more than 1000 transactions. This means new investors should expect to pay around a median sq ft price of AED 2,100 now.