Dubai or Abu Dhabi: where to invest in real estate in the UAE?

Dubai and Abu Dhabi: Introduction

Dubai and Abu Dhabi are two leading megacities of the United Arab Emirates that actively attract the attention of foreign investors. Dubai is particularly popular among expats; about 85% of its population consists of foreigners. At the same time, Abu Dhabi primarily interests citizens of the Emirates and neighboring countries, but the real estate market here also offers significant opportunities for foreign investments.

Real estate market overview

In this article, we will take a detailed look at the key characteristics of the real estate markets in these two emirate centers, including:

• Prices for residential properties
• Average yield
• Return on investment timelines

In addition, we will analyze various programs for obtaining resident status in both emirate cities.

The construction sector of Dubai

According to data from the Dubai Land Department, there is a steady growth in construction in this emirate, which continued even after the effects of the COVID-19 pandemic. In the first quarter of 2022, 15,441 apartments were completed in Dubai. In comparison, 30,019 housing units were built in 2020, and 29,180 in 2021.

Construction volumes in Abu Dhabi

Unlike Dubai, the volume of new construction in the Abu Dhabi market remains significantly lower. The demand for residential real estate here is not as high, and the number of properties being completed is limited. In the first quarter of 2022, less than 200 new housing units were completed, according to information from the analytical company CBRE. By the end of the same year, the completion of an additional 9,588 residential units was planned. In 2021, 4,182 new apartments were put into operation in the Abu Dhabi market.

Ambitious plans of Dubai

Dubai is making ambitious plans for future development. By 2040, the emirate's government aims to:

• Doubling the population
• An increase in the area of the hotel and tourism sector by 134%
• Expansion of commercial zones to 168 km²
• Increase in land plots for educational and medical institutions by 25%
• Expansion of public beach length by 400%
• The creation of green zones and protected areas that will occupy at least 60% of the entire area of Dubai.

The economy of Abu Dhabi

The economy of Abu Dhabi still significantly depends on the oil sector, which contrasts with the more diversified economy of Dubai. Therefore, the main priority of the Abu Dhabi government remains to reduce dependence on black gold and to develop various sectors of the economy. The Abu Dhabi Land Department oversees the implementation of the state urban development program, which aims to lay the foundations for effective urban planning and to develop transportation infrastructure.

Real estate prices

When it comes to real estate prices, the growth rates in Dubai significantly outpace those in Abu Dhabi. Both emirates offer areas where foreigners can purchase property, as well as zones that are closed to non-residents.

The growth of the real estate market in Dubai

In May 2022, the real estate market in Dubai showed outstanding results, with apartment prices increasing by9.6%compared to the same period last year, while villas have increased in price by an impressive19.8%These figures were mentioned in the report by the consulting company.CBRE, known for its reliable analytical data.

Comparing the current indicators, it can be noted that the average price per square meter of an apartment is now3229 US dollarsand the villas are valued at3832 dollarsfor the same square. Currently, there is in Dubai786ads for apartments starting from145,000 dollars.

Investment proposals

• In the areaMotor Cityinvestment apartments are available withwith a yield of 9%annual, where the completion is planned forin the year 2025.
• In a residential complex under constructionThe Central Downtownlocated inArdzhaneNew apartments are available with prices starting from208,000 dollarsThese apartments also offer the possibility of obtaining a residence permit and are expected to generate income.8.2%The planned completion of construction is scheduled for2026.
• Prestigious apartments in a unique projectErinin the areaCity Walkpresented at a price starting from588,000 dollarsproviding potential returns of up to7.5%The total area of such apartments is121 square metersthat makes them an attractive option for investment.

Expensive housing options

• A business center with designer apartments from a Swiss brand has opened in Dubai Marina.Franck Mullerwhere prices start from773,000 dollarsThe handover of the facilities is scheduled for2027 year.
• Moreover, a new residence has appeared.Armani Beach Residenceswith a private beach, the cost of apartments starting from6,254,000 dollars, deadline —2026.
• In the areaBusiness BayThere is another new elite residence.Eywaoffering beautiful views of the canal, pools, and relaxation areas, where the minimum price is2,768,000 dollarsThe construction will also be completed in2026..
• In a prestigious areaJVCYou can find a new complex.Cellowith swimming pools, the price of apartments starts from269,000 dollars...and the completion of construction is scheduled for...2027 year.

Overview of the real estate market in Abu Dhabi

Analyzing the real estate market in Abu Dhabi, it can be noted that the data also looks quite attractive. In March 2022, the average cost of an apartment in this city was2969 dollarsper square meter, while the villas were valued at2409 dollarsper square meter.

It should be noted that in Abu Dhabi, the availability of information for analysis is lower than in Dubai, which may create difficulties for potential investors. Over the past12 monthsThe housing market in Abu Dhabi also showed a slight increase — prices for residential real estate have risen by1.5%the cost of apartments has increased by1.6%and the villas have become more expensive1.1%.

Real estate rentals

If we consider rental prices, there is also a significant increase in Dubai.19.1%Over the past year. In May 2022, the average annual rent for an apartment was22,729 dollarsand the rental of the villa cost67,976 dollarson average.

Thus, the real estate markets in Dubai and Abu Dhabi continue to evolve, opening new opportunities for investment and capital growth for diverse buyers.

Conclusion

In concluding our analysis of the real estate markets in Dubai and Abu Dhabi, I want to emphasize that each of these emirates has unique characteristics and opportunities for investors. Dubai, with its dynamic growth, active construction activity, and diverse offerings, undoubtedly attracts the attention of foreign buyers. Statistics show a steady increase in property prices, which gives hope for good returns on investments. On the other hand, Abu Dhabi, although lagging in construction volumes, also has its advantages. It offers a calm atmosphere, rich culture, and a growing market where interesting investment opportunities can be found.

The main differences between Dubai and Abu Dhabi

• Dubai attracts more foreign investors.
• Abu Dhabi is more divided between local investments and citizens of neighboring countries.
• The rate of price growth in Dubai significantly exceeds that in Abu Dhabi.
• Residency programs offer benefits in both markets.

Choosing the right emirate

It's important to consider that the choice between these two emirates depends on your investment goals and preferences. If you're looking for high returns and rapid asset appreciation, Dubai is likely to be the better choice. On the other hand, Abu Dhabi may be more suitable for those who value stability and want to invest in a less volatile market.

Residency programs

It is also worth paying attention to residency programs. Both emirates offer attractive conditions for investors, making real estate investments not only profitable but also strategically important for obtaining citizenship or residency visas.

Conclusion

Ultimately, regardless of your choice, it's important to stay informed about the latest trends and changing legislation.Real estateIn these two emirates, there are numerous opportunities, but they require careful attention and analysis from the investor. I hope the information in this article helps you make an informed decision and successfully complete your investment projects.