Dubai real estate investment guide
Are you planning to invest inreal estate in Dubai, but don't really know how to go about it? In this guide specially prepared by the Dubai Immo teams, you'll find out absolutely everything you need to know about :
- Preparing to buy an apartment or city in Dubai,
- Surround yourself well,
- Finding the right home,
- Understand the costs associated with the purchase,
- Buying, investing and renting.
This comprehensive guide will give you a much clearer picture of the situation and, why not, encourage you to take the plunge and position yourself in high value-added, highly profitable properties in one of the world's most dynamic countries!
Introduction to real estate investment in Dubai
Why does Dubai attract so many investors?
Dubai attracts investors for several (good) reasons. Firstly, the Emirates are dynamic in every respect. Demographically speaking, the population is growing fast. Since the start of 2023, the small Emirate has attracted more than 50,000 people in just six months, taking its population to over 3.6 million.
Economically, Dubai continues to be a magnet for business. Its growth is impressive. In 2022, the Emirates recorded growth of almost 6%, according to the General Directorate of the Treasury, while many other countries suffered from the post-Covid era. Coupled with political stability, the economic aspect is one of the main assets attracting investors from all over the world.
From a tax point of view, Dubai is super advantageous! In fact, there is no double taxation for French property investors doing business here. This means you can concentrate on your project and generate impressive returns on investment, since demand is constantly rising. No tax on rental income, no capital gains tax on resale and, of course, no property tax in Dubai!
Finally, ambitions are real, and plans to build or develop new districts are often announced. The latest? Dubai Islands, a complex of several artificial islands to the north of the city, combining luxury, sea and nature to offer investors magnificent opportunities.
Overview of the Dubai real estate market
Since the start of 2023, Dubai's real estate figures are quite impressive. In the first half of 2023, 76,119 transactions were recorded, for a total value of AED 283 billion (equivalent to 70 billion euros).
By comparison, the real estate market is clearly on the rise in 2023 compared to 2022. In July of this year alone, the number of transactions exploded, increasing by a total of 56.3%! In short, all the signs are green, even if the global situation remains complex.
Understanding the Dubai real estate market
History of the city's real estate development
Dubai's real estate boom began in 2000. At the time, a number of policies favorable to foreign investment were put in place. As a result, one project followed another. In 2006, Palm Jumeirah was completed, followed by other major developments such as Palm Jebel Ali and Palm Deira. All of which are helping to put Dubai at the center of the developing world map.
In 2008, the market experienced a marked slowdown, due in part to the global economic crisis that hit the country. This complicated economic period came to an end in 2010, when the Burj Khalifa, the world's tallest tower, was officially completed.
These pharaonic projects have made Dubai an important destination for tourists and investors alike. Coupled with advantageous taxation and a growing population, the housing issue has become central to the Emirates, which are trying to stimulate the market through a large number of projects.
The big real estate developers are the main players. Emaar, Damac, Nakheel and many others are now offering residences, apartments and villas of the highest quality, in line with the government's stated ambition to make Dubai one of the most dynamic and attractive countries in the world.
Phrase investment zones
Within Dubai, some neighborhoods are more attractive than others. These are either right in the center of town or slightly off-center, but are still very accessible, whether by car or by public transport, starting with the metro.
Traditionally, Dubai Marina, Palm Jumeirah, Business Bay and Downtown have been the most attractive neighborhoods. But investors are increasingly turning to new districts such as Jumeirah Village Circle, Arjan, Damac Hills, Dubai Hills, Meydan, Dubai Creek Harbour, Al Furjan and more. These new districts are being created by the government to meet the growing demand for housing in Dubai, which has to keep pace with the ever-increasing population.
Property types: from studio to luxury villa with private beach
In Dubai, you'll find every type of property! In fact, to meet the demands of the population, you'll find everything from €100,000 studios on the market to villas costing tens of millions of euros.
If you're looking for an apartment, developers offer several types, from the 30m2 studio to the grand penthouse with a view of the Burj Khalifa. Apartments in Dubai are always located in residences with a wide range of services (swimming pool, lounge, gym, children's playground, parking, basketball court, padel court, etc.). All residences have parking facilities, a legal requirement in Dubai.
These apartments are quite spacious, with high ceilings and large windows or bay windows to let in natural light. Developers often include a parking space in their rates, and furnish the apartments (at least at kitchen level).
Finally, you can find studios! Studios are much less expensive and highly sought-after, not least because they're easy to rent and provide a good return. In short, there are plenty of options.
When it comes to Dubai villas, you'll find two types: detached villas and townhouses. Detached villas have a large plot of land and often a swimming pool. Townhouses are semi-detached villas, and are becoming increasingly popular in Dubai. They offer an excellent compromise between the often very expensive detached villa and family apartments. Dubai townhouses always include a garage and garden.
The advantages of investing in Dubai
Rental yields
The facts about real estate in Dubai are pretty clear. The average return on investment in Dubai is estimated at between 6% and 10%, depending on the area, the property and the time at which the investor purchased it. With short-term rentals, it's sometimes possible to make even more and exceed 10% profitability! By way of comparison, in France, the average rate of return in the real estate sector is between 2% and 4% before tax...
Capital appreciation
The other advantage ofreal estate investment in Dubai is capital appreciation itself. In fact, the emirate is in full development, and the government (we'll come back to this later) has announced projects and programs for the next 10 or even 15 years. Add to this an excellent infrastructure and a constantly rising demand, and you have the opportunity to see your real estate investment become an asset and increase in value.
Government incentives for investors
In Dubai, the government has introduced a number of measures to make investing in real estate easier, starting with the abolition of property tax. There are no capital gains taxes or property taxes.
The government is also keen to show its credentials. Today, Dubai is ranked 12th in the world for transparency in the real estate sector. In Dubai, you can find out the purchase or rental price of any apartment or villa in the city.
This initiative has been taken to ensure maximum transparency in the Dubai real estate market, to prevent investors, particularly foreign investors, from making bad deals due to their unfamiliarity with the market. It's sure to attract real estate investors from all over the world!
Another point is the "all-dematerialized" approach. The Dubai government wants to digitalize services and the country. Today, it's possible to visit an apartment remotely, and to pay your instalments and notary fees (DLD) without having to go anywhere. Everything is done quickly, simply and completely securely.
Finally, on the banking front, the government and banks are opening up to loans. More and more people are able to obtain a mortgage to finance their purchase. Even non-resident foreigners can now take out a mortgage in Dubai.
However, when buying off-plan property in Dubai, developers offer payment plans. This is a payment facility offered directly by the developer, with no bank and no bank interest. Investors can thus finance their property over several years, without paying bank interest, over periods that can sometimes exceed 10 years.
Legal aspects of investing in Dubai
Property rights for foreigners
There are two ways to buy property in Dubai. These are freehold and leasehold. Freehold is the classic way of buying, as in France. You invest and become the owner of your property until you or your descendants decide to sell it. You own the property and the land forever.
A leasehold, on the other hand, allows you to own your property for a period of 99 years only. 99 years after purchase, the property (whether a villa, apartment or studio) no longer belongs to you. Leasehold purchases are reserved for nationals of GCC countries (Emirates, Oman, Qatar, etc.).
At Dubai Immo, we only market freehold properties, which investors own outright.
The real estate buying process
Looking to invest in real estate in Dubai? If you decide to buy through Dubai Immo, the buying process is very simple. You can visit the property in question directly on site, via a show apartment provided by the developer in charge of the project, or discover it via a 3D visit. The Dubai Immo teams will also provide you with photos and videos of the area around the construction site, so that you can buy from a distance with confidence.
If you like the property, you can reserve it by paying your first instalment, plus the 4% DLD notary's fee. In addition to payment, you'll need to provide some essential information:
- An email address
- A postal address
- A telephone number
- A copy of your passport
You'll then have to meet the payment schedule set by the property developer. The money is sent to an escrow account, under the supervision of the DLD (Dubai Land Department, the body responsible for regulating the real estate market in Dubai).
Once construction is complete, the money is transferred to the account of the property developer responsible for developing the project. Once you've received the keys, you can take possession of the property, whether it's an apartment or a villa. You are then free to occupy the property as you wish, or to rent it out. You can, of course, delegate management.
Taxation and financial implications
In Dubai, property investment taxation is highly advantageous. As we mentioned earlier, there is no property tax. Property tax is non-existent. What's more, there are no capital gains taxes. In fact, the money generated by your property, particularly on resale, will not be taxed. Nor is there any tax on rental income.
Another point to bear in mind is that there is no double taxation between France and Dubai. As a result, you won't be taxed on your annuities if you live and manage your investments from France. However, your tax base may be affected (income tax). A tax treaty exists between France and the United Arab Emirates. We can send you the document in pdf format on request.
The only tax you'll have to pay is the 4% notary's fee - DLD. Your tenant will also have to pay the Municipality Fees (an amount corresponding to 5% of the total annual rent). These fees, which only tenants have to pay, will be added to the water and electricity bill(DEWA). Added to this is the cost of insurance, which is not compulsory in Dubai.
Real estate in Dubai: it's possible to invest together
If you want to invest in real estate in Dubai, but don't necessarily have the entire budget, don't give up! Multi-investment is possible tomorrow, and with the person(s) of your choice. Dubai Immo keeps you informed all year round about thelatest developments in the Dubai real estate market, and provides you with the tips you need to make your investment project a success. In this article, you'll learn everything you need to know aboutmulti-buyer real estate investment in Dubai.
Investing in Dubai with friends or family
In Dubai, you can invest with the people of your choice. Spouse, partner, parents, children, friends - the choice is yours! You don't have to be married, in a civil partnership or from the same family to invest in Dubai real estate with other people. There's no need to set up a company or a specific investment vehicle either - you can simply invest in your own name. It will also be possible to define the percentages held by each investor. To do this, be sure to specify the breakdown of ownership percentages. By default, the split is equal.
The advantages of multiple property investment
Multiple property investment offers a number of advantages that make it an attractive option for many investors. Firstly, it allows the cost of investment to be shared, making access to real estate more affordable. By pooling financial resources, investors can buy larger or better-located properties, or position themselves on several properties instead of just one.
With multiple investors, risks are evenly spread. If one of the investors encounters financial difficulties, the others can compensate, thus limiting potential losses. What's more, property management can be shared, lightening the workload for each investor.
By investing as a group, investors can also benefit from complementary skills and expertise. Each member of the group can contribute his or her specific knowledge, whether in property search, rental management or contract negotiation. This diversity of skills enhances the chances of investment success.
Group real estate investment, a very common practice in Dubai
Dubai Immo has assisted several hundred investor groups over the past 3 years. Whether family members or just friends, we receive daily requests from customers wishing to invest in a group. Last year, Dubai immo completed the largest number of transactions with 5 co-buyers for a single apartment. Please note that in Dubai, it is possible to put an apartment in the name of a person who does not actually pay for his or her share, which can perfectly well be paid by the co-investor(s).
Risks and challenges
Volatility of the real estate market
The real estate market, like all assets, is subject to a certain volatility. As a result, the value of your property can fluctuate, both upwards and downwards. Globally, the real estate market is going through a complicated period.
All over the world, prices are falling and borrowing rates are rising at a phenomenal rate. Dubai, however, has established itself as one of the world's market leaders, with a wealth of opportunities. The Dubai real estate market has been enjoying double-digit growth for several years. At the same time, the main European real estate markets are in decline...
As explained above, the future looks very positive in Dubai. Rising population, growing supply and demand, major projects (Dubai Islands) etc... The next few years look rather promising, boosted by the ambition of the Dubai Government and the Dubai 2040 plan.
Cultural and social considerations
Dubai is not France! So life here is very different. The city is cosmopolitan, multicultural and international. Up to 200 different nationalities live here!
So you have to be able to adapt, all the more so as Arab culture prevails here. Religion therefore plays a central role in Dubai, where traditional Muslim holidays such as Ramadan and Eid are celebrated. All religions are respected in Dubai, and it is possible to practice one's religion freely. It's not uncommon to come across people displaying their Christian or Jewish traditions in their clothing, and this poses absolutely no problem.
The same applies to customs and traditions. These are directly influenced by Arab tradition. Hospitality, religious celebrations and traditional dress are the order of the day, as is the importance of hierarchy in society. However, it's possible to dress very freely in Dubai, whether you're a man or a woman. In Dubai, a veiled woman can rub shoulders with a woman dressed in a short dress in a mall, for example, and this goes down very well. Everyone is respected in Dubai.
Finally, the Dubai lifestyle is perhaps more dynamic and fast-paced than in France. The city is bustling and in constant motion. The infrastructure is of the highest quality, allowing you to live life to the full, in safety!
Property management and maintenance
Would you like to invest in real estate in Dubai? If you don't want to deal with the management of your property, especially if you're renting it out, a good idea is to delegate the management and maintenance of the property to a real estate agency. Dubai Immo can take care of everything for you:
- writing the ad
- tenant search
- rental management
- rent collection
These services will be carried out for you according to a price list provided by the agency. For annual rentals, agency fees are payable by the tenant (5% of the annual rent).
Investing in rental property in Dubai
Short-term VS long-term rental market
There are two options when it comes to renting your newly purchased property in Dubai. The first is short-term rental. This allows you to target the tourists who flock to Dubai.
Generally speaking, studios (for couples) or 1-bedroom apartments (for young couples or groups of friends) are most in demand. The advantage of short-term rentals is that they generate attractive returns. You'll also be able to enjoy your apartment at your leisure, should you decide not to rent it out for certain periods. You'll also be able to resell your property whenever you like.
Long-term rental lets you rent your apartment for a period of a year or more. The advantage here is that your apartment is rented for a fixed period of time, with certainty. Rents are paid in a single instalment, at the start of the lease and on renewal. Profitability is a little lower than with short-term rentals, but you can have peace of mind. Landlords sometimes accept payment in instalments in exchange for a slight increase in the annual rent. It's sometimes difficult for tenants to pay a year in advance.
Regulations and licenses for rental properties
Landlords must comply with certain rules when renting real estate. On a long-term basis, landlords may not, for example, increase the rent before the end of the rental contract (unless the contract stipulates that this is possible).
Finally, if the rent increases from one year to the next, with the same tenant in place, the landlord must inform the tenant, at least 90 days before the end of the lease. The maximum increase in rent from one year to the next is theoretically capped at 10%. However, in certain cases, with the authorization of the DLD, it may be possible to increase the rent by 20%. Lease contracts are generally signed for a period of one year.
What about short-term rentals? To offer your property for rent on AirBnb, and therefore for short-term rentals, an owner must first apply to the DTCM (Department of Tourism and Commerce Marketing). If the application is accepted, then you can rent out your property and manage everything on your own, with a real estate agency or a concierge! Short-term rentals are permitted in all areas of Dubai, and applying to the DTCM is just a formality. The whole process takes just a few minutes, directly online.
Selling property in Dubai
Property valuation and pricing
Do you own a property in Dubai? Whether it's an apartment or a villa, you have every right to sell it whenever you like, as long as it's vacant. But how do you go about it? There's just one thing to do: call a real estate agency to help you evaluate the property and get the best possible price. The Dubai real estate market is constantly evolving, so it's best to go through a professional to make sure you don't make a mistake.
Finding the right real estate agent
But how do you find the best possible real estate agent? If you're reading this article, you're halfway there. Dubai Immo is a French-speaking real estate agency based in Dubai. Our French-speaking, RERA-certified teams will be able to support you throughout your project. Whether you're looking to sell your Dubai apartment or your villa, don't hesitate to call on us to help you sell your property quickly and at the best possible price.
The sales process and its stages
The process of selling an apartment in Dubai is really quite simple (and quite classic). After determining the value of the property and taking some nice photos, an advert is written and posted online. Visits are then arranged.
In Dubai, over 75% of all cats are bought with cash and no credit. So there's a good chance that your buyer won't be taking out any credit and will have the funds in his or her bank account. If the property appeals to an investor, simply complete the purchase contract electronically on the Dubai Land Department's mobile app.
All this can be done in just a few minutes. Once signed, the buyer is committed and cannot back out, on pain of losing the 10% deposit paid to reserve the apartment. To validate the transfer of ownership, all you have to do is visit a Trustee Office (notary). You don't need an appointment; you can go there on the same day.
The buyer, seller or their representatives must be present. The notary will check that the cheque is valid, then proceed with the transfer of ownership in less than 30 minutes. Cash payment is possible - it's up to you!
Tips for a successful investment
Importance of research and due diligence
Investing in real estate is a major undertaking. It has to be done carefully. The idea is not to go all out and grab the cheapest apartments. Sometimes, good deals are simply disguised: the apartments for sale are poorly located, difficult to access, located in old residences with few or no services...
You need to take the time to find out all you can about the subject, whether on your own or with a real estate agent. The reputation of the developer should also be checked, as this will play a very important role at the time of resale or even rental.
Building social relationships
Another way to make a successful investment is to create a social network. How can you do this? By visiting and discovering the area, and exchanging ideas with French-speaking expatriates and others.
Today, many groups exist on social networks, enabling you to get in touch with foreigners who have settled here and are full of good advice. And don't hesitate to check out our blog and news, as well as our lifestyle blog posts, which are always well-written and packed with information.
Keeping an eye on market trends
Finally, to make sure your investment is a success and that you don't miss out on any of the best opportunities, you need to keep abreast of market trends. If the market is moving downwards, it may be time to grab a bargain. You should also keep abreast of political and social developments, which can boost the real estate market and ensure its sustainability for the next 5 or even 10 years.
Future prospects for real estate investment in Dubai
Future trends in the Dubai real estate market
The next few years promise to be exciting for the Dubai real estate market. In addition to a stable political system, the small Emirate can also count on a growing economy to attract many new talents and families looking for a new life. In fact, the population is growing. Some studies even claim that the population could double in the next 20 years, to around 6 million people. As a result, supply has to keep pace.
Emerging opportunities
Numerous neighborhoods are being developed to offer a new range of housing. Dubai Islands, to the north of the city, comes to mind. A district of artificial islands, it will feature several marinas, miles of beach, magnificent hotels and sumptuous apartments. South of Dubai, Palm Jebel Ali. Twice the size of Palm Jumeirah, it could well become Dubai's new must-see tourist destination in years to come.
Others, such as Rashid Yacht & Marina and Dubai Creek Harbour, offer a luxurious and elegant living environment. In short, numerous projects are underway or have been announced, raising the prospect of superb investment opportunities.
Final tips for investors
Take the time to study the market and talk to industry professionals. At Dubai Immo, all our real estate agents are at your disposal and will be delighted to read, listen and advise you, answering any questions you may have. You'll also benefit from the support of an honest and transparent team. So don't hesitate to send us an e-mail at [email protected] or give us a call at :
- +971 56 367 2667 (Dubai number)
- +33 7 56 82 82 73 (French number)
