Dubai has emerged as one of the most dynamic and exciting cities for foreign investors in recent years. This is largely due to the government's shift in focus to diversifying their economy away from just oil. Not only has the government provided financial incentives such as tax cuts but also offers potential investors residency and long-term visas. This article will discuss all the reasons why you should invest in Dubai real estate and the things you need to consider before exploring this exciting opportunity further.
- Dubai and the UAE have some of the most progressive tax laws and incentives to attract foreign investors.
- Dubai’s GDP continues to climb by 3% year-on-year, with financial institutions predicting further growth.
- The average return on investment (ROI) for property investments is between 5% and 15%.
- From October 2023 to October 2024 there has been a 35% increase in property sales and an increase in property prices.
- Through the UAE Golden Visa, you can turn your property investment into a residency or citizenship.
Dubai’s Robust Economic Growth
The Dubai economy has seen a substantial increase in the past few years. Since the 2019-2020 financial year the economy has not had any negative growth, in fact, the GDP continues to climb at a rate of more than 3% year-on-year with many financial institutions making further predictions of sustained growth.
Tax Benefits and Favorable Policies for Investors
One of the biggest reasons investors consider Dubai for future investments is the incentives and tax benefits the government provides. Here is a quick look at the potential tax benefits you can expect:
No income tax
The UAE does not impose income tax on individuals, it instead makes use of a 5% VAT rate which comparatively is extremely low.
Corporate tax
The UAE introduced a corporate tax of 9% in 2023 aimed at larger businesses.
Smaller businesses falling into the following two categories are exempt:
- Profit per year is less than $102,000
- Annual Revenue is less than $816,000
Even if your business falls outside of these two brackets, 9% is very low compared to a country like the US where you can expect to pay upwards of 20% corporate tax.
No inheritance tax
The UAE does not charge wealth or inheritance tax so you can be assured that your family's wealth will stay in the family.
No property tax
There is no property tax, so investors are free to purchase land and property without worrying about further taxes. It is important to note that while VAT does not apply to the sale of land, an administration fee needs to be paid to the Dubai Land Department when transferring ownership and VAT still applies to property-related services like real estate agent fees.
Aside from the tax benefits, Dubai offers many policies and projects that make it the perfect location for new investors. Here are some of the policies pushing the UAE to the forefront of modern governance:
- The Dubai Clean Energy Strategy: This program was announced in 2015 and states the government's aim to have 75% of its energy come from renewable resources by 2050. This obviously comes at the cost of stricter regulations and in some cases more expensive property development. But as part of this program, the government provides easy access to loans for renewable energy projects and even gives rate cuts for projects that meet certain renewable building standards.
- Visa Initiatives: The UAE has launched various visa programs to encourage foreign investors and immigrants. The largest of these initiatives is the UAE Golden Visa.
- 100% Foreign Ownership of Companies: In 2021 the commercial law in Dubai was changed to allow 100% foreign ownership of a company based in Dubai.
- The REST System: The Real Estate Self-Transaction (REST) is a system that was put in place in 2018, to streamline the process of managing real estate. REST allows owners and tenants to manage everything from lease registration to rental disputes.
High Return on Investment (ROI) in Dubai Property
Currently, the average ROI for residential properties is between 5% and 7%, depending on the location. For commercial properties, this is even higher, with an average between 12% and 15%. These ROI rates, combined with the progressive tax policies and other incentives offered, make Dubai an attractive investment opportunity for anyone looking to live abroad.
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Dubai’s Real Estate Market and the UAE Golden Visa
Dubai offers some of the most diverse real estate opportunities out there. From equestrian estates and huge villas to small apartments and office buildings, there is something for everyone.
With the introduction of the UAE Golden Visa, Dubai has seen a surge in foreign investors and migrants; and this has significantly impacted the market. Consider that from October 2023 to October 2024 there has been a 35% increase in property sales. With this increase in demand, there has also been an increase in property prices (in all sectors).
Over the past year (2023 - 2024) the markets saw the following changes:
- Average Apartment Price: + 3.1%
- Average Villa Price: + 3.4%
- Average Commercial Price: + 36%
- Average Land/Plot Price: + 9%
The government has introduced many new policies to help drive this improvement.
The UAE Golden Visa provides a way for foreign investors to obtain residency in Dubai through investments. This visa comes with 3 different paths for investors to follow:
- 10-Year Residency via Real Estate Investment: Real Estate Investors can obtain a 10-year UAE resident visa, by investing a minimum of $544,000.
- 2-Year Residency via Real Estate Investment: Real Estate Investors looking for a cheaper option can look at the 2-year Residency Visa. This visa can be obtained by purchasing property in the Freehold Zones. The minimum investment amount varies, depending on the number of investors.
- 5-Year Entrepreneur Residency: This visa is aimed at entrepreneurs with a project valued at a minimum of $136,000. Entrepreneurs will need to undergo a process that involves having an auditor (from the UAE) verify that your project meets the requirements, and local authorities will also need to approve the application.
For a further explanation of the requirements for each visa, read this article by Mirabello Consultancy.
Leasehold vs Freehold
When considering real estate investments in Dubai, it is important to understand the difference between Freehold Zones and Leasehold Zones. In the UAE, the government has designated certain areas as freehold areas where non-UAE citizens can buy and own land/property. This allows any foreign investors to own land and do with it what they will. Outside of these areas, foreigners cannot buy land, these areas are considered leasehold areas. In these areas, foreigners cannot own land but can enter long-term lease agreements (typically 10-99 years).
Stable Legal Framework for Foreign Investors
Navigating the UAE legal system can be challenging, as it has many differences compared to other countries. The biggest things to look out for and understand when considering an investment in Dubai are:
- Real Estate Regulatory Authority (RERA): RERA is the regulatory authority in Dubai and understanding its regulations and requirements is essential before making any investments.
- Real Estate Investment Trusts (REITs): These trusts are structured similarly to mutual funds and provide another way for investors to get into the Dubai Real Estate market without buying land. These trusts are generally focused on commercial buildings and instead of receiving profits directly, the profits are split between investors.
- Taxes and Legal Fees: While the tax system in Dubai is focused on providing investors with incentives and tax cuts, there are still legal fees and taxes that may be incurred. It is also important to note that a 4% fee needs to be paid to the Dubai Land Department on the registration of a new property.
- Anti-Money Laundering Laws (AML): Dubai (and the UAE as a whole) take financial crimes such as money laundering and fraud very seriously and investors are not exempt from these laws. This has resulted in quite a strict legal system around transactions, and you will be expected to adhere to these laws and regulations.
Strategic Location and Global Connectivity
Dubai is host to some of the largest and most advanced ports and airports in the world and is in the process of further improving this infrastructure.
Dubai’s central location has allowed it to become one of the leading hubs of industry and innovation. Situated conveniently between the East and West, it has become a very sought-after location for multinational companies. Some of Dubai’s biggest ports are:
- Dubai International Airport: is the busiest passenger airport in the world. Due to its prime location and state-of-the-art infrastructure, Dubai International Airport handles over 85 million passengers a year. There is also the Al Maktoum International Airport which is smaller but still sees a large amount of traffic.
- Jebel Ali Port: is the largest in the world and the busiest Port in the Middle East.
One thing that makes these ports of entry even more successful is the government's strategic positioning of Freehold zones around all of these major ports. This has led to an influx of multinational companies looking for headquarters in the region.
Dubai’s Vision for the Future
The UAE has several plans and visions for the future and if we look at how their plans have worked so far, the future looks bright:
2025 - 2030
- Abu Dhabi Economic Vision 2030: This is a long-term initiative to diversify the country’s economy away from just oil.
- Dubai Autonomous Transportation Strategy: Aims to have 25% of the total transportation in Dubai, to function autonomously. This is projected to have a profound effect on road safety.
- Dubai Industrial Strategy: Aims to establish Dubai as a preferred manufacturing source for global businesses. Part of this initiative is to promote environmentally friendly and sustainable production.
- Dubai 3D Printing Strategy: Aims to promote Dubai as the leading source for 3D printing technology. Specifically in the construction, medical, and consumer industries.
2028
- Emirati Interplanetary Mission: The UAE will launch a 5-year interplanetary mission to land a spacecraft on an asteroid that is 560 million kilometers from Earth.
Lifestyle Benefits and Luxurious Living
Dubai, often synonymous with luxury and opulence, has garnered international acclaim for its lavish lifestyle and remarkable advantages for residents. Dubai is renowned for its futuristic architecture and state-of-the-art infrastructure. The government consistently invests in developing and maintaining top-tier facilities, including modern transportation systems, world-class healthcare, and educational institutions. Residents benefit from an unparalleled quality of life with access to world-class amenities and services.
How Mirabello Consultancy Can Help You Invest in Dubai Real Estate
Mirabello Consultancy is a Swiss-based company guiding foreign investors through programs that make it easier for them to gain residency and citizenship in select countries around the world. The company’s team of experts has helped many investors successfully apply for the Golden Visa Program.
Mirabello Consultancy offers customized approaches to enhance your investment portfolio and maximize returns. This includes options such as establishing a new business in an eligible country, investing in real estate, or engaging in renewable energy initiatives.
Dubai offers unparalleled access to the most dynamic economies, ensuring accelerated growth within a secure, future-forward network ecosystem. With its future vision in mind, it is a global hotspot for innovation, attracting the best talent and forward-thinkers. Because of this, Dubai is the world's foremost hyper-connected, pro-business hub, uniting East and West, making it the most attractive investment decision for foreigners looking to diversify their portfolios.
FAQ
Acquiring property in Dubai or elsewhere in the UAE with a minimum value of $545,000 qualifies you for a 10-year Golden Visa.
As an expat, you can apply for a mortgage in Dubai either for a home you intend to live in, or as an investment property. However, depending on your circumstances, and the specific property you want to buy, the deposit amount you are asked to pay can vary.
- Downtown Dubai: The high-end residential buildings offer luxury apartments with stunning views, making them highly sought after.
- Dubai Marina: Investing in a property here means access to a vibrant lifestyle with numerous restaurants, boutiques, and entertainment options.
- Palm Jumeirah: Famous for its unique palm-shaped design, Palm Jumeirah offers luxurious villas and apartments.
- Palm Jebel Ali: Newest man made Island in the form of a Palm tree, larger than the famous Jumeirah Palm. Uniquely shaped and ready for a new success in the coming years offering modern living of mixed infrastructure and one of a kind luxury homes.
- Jumeirah Lake Towers (JLT): JLT is a mixed-use community with residential and commercial properties, in close proximity to Dubai Marina.
- Business Bay: It is the city's business hub, housing many multinational corporations.
- Jumeirah Village Circle (JVC): JVC offers a tranquil lifestyle with an array of modern townhouses and apartments, ideal for families.
- Dubai Hills Estate: This master-planned community offers a mix of apartments, villas, and townhouses, with a golf course, parks, and a shopping mall.
- Arabian Ranches: One of Dubai's most established communities, Arabian Ranches offers spacious villas and high-quality amenities perfect for families.
- Damac Hills 2: Offering a variety of townhouses, villas, and apartments amidst a green landscape, Damac Hills 2 is a neighborhood perfect for those seeking a serene lifestyle.
- International City: A hub of diverse cultures, International City is well-known for its residential options at affordable rates, retail outlets, restaurants, and recreational facilities.
