Optimizing the Dubai Real Estate Opportunity

Considerations for International Investors

Beth Hirshfeld

Real Estate investors who understand the intricacies of the Dubai real estate market are better-positioned for success.

As outlined in “Dubai’s Time to Shine”, Dubai is emerging as a leading global city and a natural hub for those seeking a welcoming and upscale place to live and work. Recognizing its potential as well as its comparably low prices versus other leading cities, real estate buyers are moving quickly and decisively to take advantage of this growth. But opportunities for domestic and foreign buyers differ, and these can even vary across the 7 individual Emirates that comprise the UAE. Understanding the differences and associated opportunities will separate savvy property buyers from the rest of the pack.

Owning Property in Dubai
Dubai, the most populous of the 7 Emirates, is one of the world’s leading multicultural cities, with expatriates from almost 200 countries comprising approximately 85+% of its population. It has long been the primary business and tourism hub for the Middle Eastern region, and more recently has become one of the top cities for celebrities, athletes and wealthy expats to redomicile. The ease with which its citizens and residents live together is an excellent example of Dubai’s values of tolerance and coexistence, and has helped generate additional attention and interest from the international community.

Part of this evolution was spearheaded by His Highness Sheikh Mohammed bin Rashid al Maktoum introducing a new law in 2002 that enabled expats and foreigners to buy and sell, as well as rent or lease, property in designated areas of Dubai. Potential buyers now do not need to either live or work in the Emirate, however there is an ability for buyers to obtain an investor visa to reside in Dubai should they meet certain thresholds.

These changes in property ownership rules have paved the way for substantial foreign real estate investment. Though UAE Nationals are still the primary purchasers of Dubai property, foreign buyers are growing quickly and substantively, posting record numbers this past year. The composition of foreign buyers is also shifting, with European interest, particularly from the UK, France and Germany, growing exponentially as they became more familiar with Dubai thanks to the UAE’s skillful handling of the COVID-19 pandemic. This, combined with continued interest from Asian, CIS and Middle Eastern buyers has helped Dubai become one of the leading foreign real estate markets in the world.

Downtown Dubai
Photo: Downtown Dubai

Which Properties and Where?
In its simplest form, buyers can purchase or lease land and/or buildings in Dubai. The ability to do so is nuanced, with differences between certain areas and for people of differing nationalities.

Buying Land:
For those considering buying land in Dubai, there are three key types of residential ownership. These include:

  • * Freehold land, which is available for UAE and GCC nationals only;
  • * Designated freehold land, which is available for all nationalities; and
  • * Leasehold land (which is leased from 1-99 years), which is open to all nationalities.

Buying Buildings:
For those looking to buy physical buildings, there are four options for purchase:

  • * Freehold property, which is available for UAE and GCC nationals only;
  • * Designated Freehold property, which is available for all nationalities;
  • * Commonhold property, which is available for all nationalities; and
  • * Leasehold property (which is leased from 1-99 years), which is open to all nationalities.

Much like in the rest of the world, real estate land in Dubai allows the buyer to own the plot outright and in perpetuity. A buyer is registered on the Title Deed in the registry at Dubai Land Department and the land and any accompanying property can be rented, sold, or inherited as determined by the buyer. For buildings, the same options and restrictions as for land exist, but there is also the ability to purchase commonhold property, which are properties located in a building such as an apartment complex.

Leasehold land, in contrast, comes with a tenure and terms attached. For leasehold plots, after the period expires, the owner has the right for renewal at a certain price. This system may be familiar to those that have acquired properties in London, the boroughs of which use a similar system.

UAE and GCC nationals, as well as Dubai companies wholly owned by GCC nationals can buy freehold real estate anywhere in Dubai. Expats and foreigners, however, may only buy freehold land located in “designated areas” as determined by the Ruler of Dubai. As outlined on Bayut, a UAE real estate portal, there are currently 60+ designated areas in Dubai where non-GCC nationals can purchase freehold property. Some of the most popular of include Dubai Hills Estate, Palm Jumeirah, Downtown Dubai, Dubai Marina, Dubai Hills Estate, and Jumeirah Beach Residence. These areas offer different lifestyle options and amenities, offering foreign buyers a wealth of choice and price-points.

Creek Harbour
Photo: Creek Harbour

Other Considerations:
Beyond the land and physical property, a great benefit of Dubai real estate is the opportunity for buyers to apply for a UAE residency visa. Last month, the thresholds for the Dubai investor visa applications were reduced to allow for an individual who owns a property valued at Dhs750,000 ($205,000 USD) at the time of purchase to apply for a three-year renewable residency visa. Visa residency lengths differ by investment size and the use of mortgages and will be explored more fully in a later article.

In addition to being a vibrant place to live or own a second home, Dubai offers excellent return potential for investors. Rental yields and capital appreciation potential are amongst the highest of comparable cities, the rental system is clear and efficient, and the UAE does not charge tax on capital gains or rental income. To optimize the opportunity, it is important to work with a reputable and trust-worthy real estate broker with strong local knowledge. Christie’s International Real Estate – Premier Estates is a leading luxury real estate company in Dubai that provides unrivalled expertise and a variety of services to both local and overseas clients. As part of the Christie’s International network, it has more than 135 affiliated brokerages with 27,000 real estate professionals in 45 countries, offering clients global expertise and support. For more information about how you can better understand and take advantage of the Dubai real estate market, please don’t hesitate to contact us.

Beth Hirshfeld is a Private Client Advisor with Christie’s International Real Estate | Premier Estates. A Canadian lawyer based in Dubai since 2014, Beth has spent her career working with some of the highest-profile executives, politicians and investors. Her clients rely on her honesty, attention to detail, discretion, sense of style and personable nature to optimize their outcomes and enhance their experience. Her qualifications as a Lawyer, Certified Staging Professional, Interior Decorator, Certified Aging-in-Place Specialist, and her Certificate and Diploma in Company Direction provide her with the background to handle the various facets of the industry.