What Makes Dubai Real-estate Sector Attractive for Global Investors?

In the last decade, Dubai’s skyscrapers have become attractive to elite international investors.  Along with its luxury aspect, Dubai real estate market also offers a better return on investment (ROI) on properties compared to other major international cities which makes it the preferred choice for global investors.

Earlier affluent people used to invest their fortunes in buying second homes in western cities such as London, Berlin, Geneva, Paris, and New York. However,  in the last decade, Dubai has outpaced many western cities to emerge as the biggest investment destination. With rising investments from across the globe, Dubai’s real estate sector head honchos are now customizing their sales strategies as per the requirements of international clientele.  

Exponential Surge in Investments into Dubai’s Real-estate Sector:

Dubai has maintained its leading position as one of the top three investment destinations globally in 2020 despite the pandemic. A vast number of property buyers in the emirates hail from abroad, making it the most active market for foreign real estate investors in the world.

According to the annual transaction report – 2020 issued by the Dubai Land Department (DLD), Dubai’s real estate market recorded 51,414 transactions in 2020, representing a value of over Dh175 billion. Indians emerged as the biggest investors, followed by the Chinese, British, Pakistanis, and French. Dubai’s real estate sector attracted 19,757 foreign investors, who concluded 24,666 investments worth over Dh35.6 billion.

There was also the great interest shown by the investors from the Gulf Cooperation Council (GCC) countries in buying properties in Dubai. About 6,704 investors from GCC recorded 8,659 investments worth Dh14.8 billion. Emiratis topped the list of GCC nationals, followed by Saudis, Kuwaitis, Omanis, and Bahrainis. In 2020, 4,388 Arab investors registered 5,283 transactions with a total value of about Dh7.5 billion.

Growth Drivers:

The prime reason for international buyers to buy property in Dubai is characterized by dynamism and tax exemptions.  Tax rates in other parts of the world are significantly higher and this is one of the biggest reasons for global buyers to view the Dubai property market favorably. Dubai is also popular due to its location as it is almost located equidistant between Asia and Europe.

There has been a colossal rise in the number of Indians buying properties in Dubai as the country’s central bank – the Reserve Bank of India (RBI) has doubled its foreign exchange remittance limit, subsequently making it much easier for Indian investors to purchase property in Dubai. Furthermore, Expo 2020 has also increased the level of enthusiasm among foreign investors.

Top Reasons to Invest in Dubai Property Sector:

The factors which make Dubai’s property market charming for international investors are as follows:

  • Higher Annual Rental Yields: Studies conducted by real-estate investment consulting firm, Global Property Guide also reveals that an average yearly return on Dubai properties is 5.19%. This is significantly higher compared to annual rental yields in New York (2.9%) London (2.7%), Singapore (2.5%), and Hong Kong (2.4%). With a rise in the real estate value post-Covid era, Dubai’s property market has much higher possibilities of even better returns.
  • Lower Property prices per square meter: The property prices per sq. meter in Dubai are far lower compared to other international cities. According to the Global Property Guide, the cost per sq. meter for a 120 sq. meter apartment in Dubai is US $5,918 compared to Hong Kong (US $28,570), London (US$ 26,262) New York ($17,191) Tel Aviv ($17,149) Geneva ($16,467) Tokyo ($ 16,322), Paris ($15,867) & Berlin ($7,325). Even the cost of buying a house is much cheaper in Dubai compared to other international cities. According to research by Alliance Business Advisors a prominent real-estate consulting firm, the average price of a home in Dubai is AED 1 million (US$ 272,000), compared to US$ 1.2 million in Hong Kong, US$ 1 Million in Munich, US $ 915,000 in Singapore, $ 650,555 in Paris, and $ 649,026 in New York, as per China Daily.
  • Zero Property Tax: Properties in Dubai have a 0% tax on property purchase and filing income returns. The burden of the property tax rate in other countries is higher such as UK (2.53%) France (1.70 %), Greece (1.50 %) Iceland (1.48 %), and Italy (0.71 %) according to the International Tax Competitiveness Index (ITCI). Zero Property tax is another factor that makes Dubai a preferred choice for international investors.
  • Safety: UAE is one of the safest regions in the world which makes Dubai a top choice to invest in. According to Gallup Law and Order Index 2020, the United Arab Emirates is the 4th safest country in the world compared to Germany (ranked 26th) France (ranked 31st) Japan (ranked 33rd) US (ranked 36th), and the UK (ranked 49th).  In terms of Law and Order, UAE has been ranked 10th globally in 2019 Gallup’s global Law and Order Index.
  • Residency Visa: To make its real-estate sector attractive for global investors, the UAE government has rolled out new visa laws linked to property investment offering a quick path to residency (subject to certain conditions). 

According to Property Finder, for properties valued above AED 1 million (US $272,200), the investor may be entitled to a 2-year residency visa. For properties valued above AED 5 million (US $1.3 million), the investor may be entitled to a 5-year residency visa. While for properties valued at above AED 10 million (US $2.7 million), the investor may be entitled to a 10-year residency visa. Dubai is offering property investors a unique opportunity to gain a resident visa depending on the purchase.

The Imperative Role of Property Management Firms:

Property management firms are playing a key role in making Dubai real-estate sector attractive for global investors by offering world-class services. They are facilitating investors in managing property finances remotely which is the biggest challenge faced by them. 

KAIZEN Asset Management Services is one of the top ISO 9001:2015 certified providers of end-to-end solutions in Property Management, Strata Management, Community Management, Lease Management, Handover Services, and Investment Advisory. We offer  to simplify the journey for each party i.e. investors, tenants, and landlords.

Compliance and ethics have been an integral aspect of Kaizen AMS’ success story.  We follow international best practice standards to make our investors feel more secure that their investment is managed properly. Kaizen AMS’ strong commitment to quality, compliance, & ethics has earned it a trust vote of notable real-estate clients in the UAE such as – Emirates REIT, EMAAR Properties, Meydan, Meraas Estates, Mazaya, and Al Futtaim, to name a few.

Our state-of-art property and strata management services assisted these clients in ensuring that both tenants and homeowners drive utmost satisfaction with the services and occupancy rates stay at the pinnacle. Our services are a wheel in driving billions of dirhams of investments in the UAEs real-estate sector.

The Role of Compliance in the Success of PM Firm:

The primary reason for the unparalleled services offered by the property management firms is their strict compliance with international compliance & management standards such as ISO 9001:2015, QMS, BCMS, and RICS.

The compliance with the guidelines stated in ISO 9001:2015 assists property management firms in outlining a framework for improving quality and a vocabulary of understanding to offer services that consistently meet the requirements and expectations of customers and other relevant interested parties in the most efficient manner possible.

The Quality Management Systems (QMS) is the aggregate of all the processes, resources, assets, and cultural values that support the goal of customer satisfaction and organizational efficiency. The implementation of QMS assists property management firms in defining the structure, scope, responsibilities, the necessary content (defined processes and documentation), and the resources required to ensure the highest standards of quality. The implementation of Business Continuity Management (BCM) capabilities enables property management firms in restoring their businesses to normal operations during business interruptions, which range from a simple power outage to a Category 4 hurricane. The compliance with the Royal Institution of Chartered Surveyors (RICS) is another reason for the triumph of the property management sector. It guides the sector in promoting and enforcing the utmost professional standards in the development and management of land, real estate, construction, and infrastructure.

Ejari which means ‘my rent’ in Arabic is the mandatory registration of a tenancy contract that brings transparency in the operations. It is a smart leasing management application that specializes in the management of leasing operations. Ejari assists property management companies, property owners, and even the owner’s representatives in managing their leases from anywhere and at any time. It also reduces the cost and time required to complete the registration of rental contracts and facilitates the people to simply register their Ejari contract online.

Real Estate Regulatory Authority (RERA) – regulatory arm of Dubai Land Department (DLD), plays a key role in the swift operations of property management firms. It has administrative independence, enjoys its own financial system, and secures full legal authority to regulate Dubai’s realty. RERA has been instrumental in defining Dubai’s legislative framework in respect of real estate matters as well as in the supervision of real estate regulatory framework and development. It is also responsible for settling disputes between tenants and landlords.

The compliance with the above laws enables property management firms to quickly register the rental agreements. RERA has been instrumental in setting up the policies and plans to effectively regulate the real-estate & property management sector and ensuring Dubai Real-estate sector always remains an apple of the eye of foreign investors.