Dubai Property Investing 2023 – A Quick Insight

Dear investors,

Hope you and the family are all well,
As we enter 2023 and everyone is finalising their personal and professional goals for 2023, I thought it would be best to just go into some detail on investing in Dubai. Explaining the basic fundamentals to help you and your family implement any investment strategy about investing in Dubai and adding this location to your portfolio. Dubai outperformed multiple markets last year in 2022, London, and New York to name a few with sentiments in the market such as tax incentives, safety, leadership, and location among the driving factors.
I moved out to Dubai in 2014 and in 2016 I set up Off Plan Dubai and now have offices in the UAE and London, we assist families/investors like yourself but predominately funds and family/private offices on larger deals in the UAE.
Fundamentally Dubai is an easy property market to understand and has a couple of key indicators which are easy gauges of performance and the growth of the market.
In Dubai, you would have 3/4 main developers, Emaar who are government-backed, same as Dubai Properties (Meraas) and then Damac would be the largest privately owned development company. There is a luxury section such as Omniyat and after this there is then some big players such as Sobha, Select Group, Al Barari, Ellington among a wide range of smaller and boutique.
Understanding the demographic of the intended market of a property or masterplan is fundamental to the market performance, 2022 had two standout features, after Covid families wanted to move out of apartments into a villa/townhouse with outdoor space. The premium market in Dubai gained massive traction, 40-50% rises in some places and areas such as Palm Jumeriah and other waterfront communities have performed as well as any real estate market in the world as end-users and investors seek out luxury water-side living and a sense of freedom.
Benefits of an Investor purchasing in Dubai:
– It is the easiest real estate transaction in the world. Takes roughly 30 minutes to reserve and then the Sales Purchase Agreement is sent within 30 days.
– Tax-free earnings
– Dubai has very high growth forecasts for appreciation, some projects have gone up 50% during the construction phase and based on the down-payments some of my investors have made 100% returns on the capital invested.
– Safe community, great healthcare and family-orientated living.
– Active and vibrant real estate market, very easy to re-sell good units and large shortage of rental options for family demographics.
– Fully renewable investor visa for investors with property over 1 million AED, this comes into play when the property is ready.
2022 saw the busiest year on record, with record sales numbers, and the luxury market broke record transaction values in multiple locations.
Dubai is a simple map to read, Emaar owns the majority of the leading masterplans, Downtown home to the Burj and Dubai Mall, Dubai Marina, Dubai Hills Estate, Emaar South and Dubai Creek Harbour. They sell off individual plots to other developers but these master communities are the main areas within Dubai. When investing the completed masterplans such as Downtown or Dubai Marina reliant on market improvements to implement appreciation as the price per soft will have increased during the construction phase and the quality of the finished product is now built into the price.
Finding a balance, between upcoming potential and a location that already has solid fundamentals and offers a great deal is the key to investing in the UAE. It is not overly difficult to navigate and on every launch in a masterplan, the developers will build in a slight price increase, thus benefiting early investors. For instance, the first launch in Dubai Creek Harbour (Harbour Views) sold front facing 1 bedroom at 897-950K AED. These now go for around 1.3-1.4 and new launches wouldn’t even place 1 bedroom as a front-facing unit.
My personal take on the market would be twofold, I would aim at luxury waterfront developments, catering to the idyllic Dubai premium living option. Ellington House, Six Senses, Orla, or something similar. My main thought though would be to go for the average family home, in communities where the standard of living and features are considerably superior to the current options. Dubai’s immigration forecasts are ever-growing, the population in 2022 surpassed 3.5 million for the first time and this is expected to double by 2040, it’s an opportunity for real estate investors to create generational wealth through strategic and well-thought investment strategies.
When I moved to Dubai initially in 2014 the Dubai market wasn’t great, it was stagnating, developers were stalling on a couple of projects and delays were a-plenty. Not only that but some of the projects weren’t great. The first launches I was involved in, with really high-profile developers claimed to be family-inspired locations but in truth, they had a gym, shop, and other necessities you would find anywhere in the world. Dubai could and should have been doing better.
Since then we have seen developers go on the defensive, stand up and really take the market by force. In conjunction with the government leadership on Covid and other important matters, it has created the perfect storm. Let’s take Damac Lagoons, for example, the townhouses have not gone up much in price to previous launches, if at all. But what we have seen, is just a boom in community facilities, lagoons, outdoor cinemas, family shows, an abundance of restaurants, music events, and weekend family activities. You now don’t have to leave the master plans you reside in. The first developer to do this, I would say was Nshama (Emaar subsidiary) they launched 3 bedroom townhouses for 1 million AED in the initial stages (now go for around 1.75/1.8) but the masterplan and the facilities were what enticed end-users to purchase, the show homes were nice, no different to others but the promise and then fulfillment of a higher standing of living resonated across the market.
It seems the developers are aware of my investor strategy and Damac has placed a cap on investors buying two units or more, it’s easier to be a single/dual investor now than a family office or institutional investor.
Purchasing Notes:
– Payment Plans are generally around 80/20 now (80% during construction and 20% on Handover).
– You can flip (re-sell) the unit once you have reached 50% of the price paid (make sure you have the funds for 50% of the development when buying)
– Focus on a combination of yield and appreciation. Appreciation may be higher in the luxury sector over time but the yield would be lower.
– 8/9% yields are not uncommon (tax-free!)
– Non resident’s finance options are 50%
– Residents can gain around 70%
This is a really brief insight but I hope it helps to point you in the right direction.