Dubai real estate market: new opportunities or a “bubble”?

Dubai and its attractiveness for investors

Dubai is attracting more and more investors from all over the world: rising real estate prices and stable demand are generating huge interest. Many people wonder whether we have missed the chance to buy an apartment in this city. Or are we on the edge of a “bubble” that may burst at any moment? Alexey Slauta, head of the real estateagency Address Property in Dubai, shares his views on the current changes in the market and talks about methods of successful investment.

Dubai's real estate market is affected by external circumstances

Real estate in Dubai shows a stable growth. Today, the average price of residential space in the emirate is approximately $2,910 per square meter. In October 2022, the cost in the region increased by 1.8%, and for the whole of last year, apartment prices rose by 8.5%, while villas went up in price by 13%. According to data for the third quarter of 2022, Russians have become the main buyers in the UAE, followed by customers from the UK, India, Germany and France.

Alexey Slauta says that we should not expect a slowdown in the market in the near future.

Key changes in the market

The Dubai real estate market has not seen much change in recent months:

• Home prices continue to increase.
• The predominance of demand from Russians is becoming more and more noticeable.
• The government is actively investing in infrastructure development.

There are more and more requests to find apartments within a budget of $150,000 - $200,000 for personal residence, and I am not surprised by the choice of those who decide to move specifically to Dubai.

Why Dubai is considered a promising city

Dubai is undoubtedly considered one of the most expensive, yet promising cities. The process of applying for the necessary documents, finding a job and starting a business is much simpler here. Unlike some Asian countries or Turkey, where the real estate market is focused on locals, Dubai was originally designed as a city for expats. Out of 3.5 million people, only 250,000 are natives. This creates an opportunity for newcomers to interact as equals, which creates a comfortable business environment.

The situation is reminiscent of America, where many people were once immigrants, and interpersonal relationships here are similar. This contrasts with Europe, where migrants often face isolation.

Dangers and risks

However, certain difficulties have arisen recently that cannot be ignored. Investors should be attentive and carefully analyze the current market realities. It is very important to consider all aspects and risks associated with real estate investments. Despite the positive trends, it is always worth remembering that the market is subject to change and new legislation or economic circumstances may affect the situation.

Conclusion

As a result, Dubai continues to be an attractive destination for real estate investment. Interest in this city is not fading, and there are no signs of change for the better yet.Hope for success is still realisticfor those who are ready to study the market thoroughly and move forward with a sound investment plan. If you are considering investing in real estate, stay abreast of all changes, consult with professionals and pay attention to key trends to take full advantage of all opportunities.

Resident visa and its duration

Today, a resident visa based on the purchase of real estate is granted for two years. Previously, this period was three years, which creates certain difficulties for people wishing to open a bank account on the basis of this visa. Nevertheless, having a work visa simplifies the process of opening a bank account and eliminates possible difficulties.

New government initiative

At the same time, there are also positive changes: at the end of last year, the local authorities initiated the launch of a new program aimed at creating jobs, under which it is planned to invest about17 billion dollars. This initiative should help to grow Dubai's population and attract a new pool of professionals.

Special attention is paid to IT workers, for whom various benefits and bonuses are provided. It is important to note that there is no income tax in the United Arab Emirates, which makes this country particularly attractive for foreign nationals seeking to avoid tax liabilities on salaries or profits.

Development and business opportunities

In addition, one of the key characteristics of the United Arab Emirates is its wealth and active development. The country offers many business opportunities and diverse market segments.

Dubai's urban development program until 2040 provides for:

• Increase in the population of the city to11 million people.
• That's 2.5 times what it is now.

While such projections may seem excessive, they are as good as the feasibility of projects already realized in the UAE.

Expert opinions on the real estate market

Some experts express opinions that the real estate market in Dubai resembles a bubble that can burst at any moment. I too am facing similar warnings that are troubling many minds. Many people expect that the real estate market will soon start to correct and prices as well as demand will come down.

Nevertheless, there has been steady and significant growth in practice.

Influence of external factors

It is important to understand that the real estate market in Dubai is predominantly dependent on external factors.

Analysis of the real estate market in Dubai

In Dubai, almost every well-known construction company has teams of highly qualified analysts who are engaged in a thorough study of the profitability of various construction projects. When information appears about plans to erect several multi-storey projects, it indicates that the realization of such projects will be economically justified.

Decision-making process

The process of preparing and making a final decision to launch a new construction project can take three to six months. If the market starts to show negative trends, companies in the construction industry often change their strategy and reconsider their approach to their plans. One of the key factors is the increasing interest in rental housing.

Increase in housing prices

This, in turn, caused a noticeable increase in prices - about 30%. As a result, at the moment it is very difficult to find a quality apartment or house in Dubai, as the volume of offers obviously cannot cope with the growing demand. If with apartments there is still a possibility to choose, it becomes almost impossible to find a suitable villa - almost all options are already occupied.

Migration and rental demand

The number of migrants and tourists coming to Dubai is enormous, which leads to a shortage of supply in the rental market. There are also official indicators such as the bubble index provided by UBS and Knight Frank. In October 2022, Dubai was in the green zone with a score of 0.16, one of the few positive signs in this context.

It is important to understand current trends

According to experts, if there will be a decline in the real estate segment, even with the indicator in the “yellow zone”, it will not necessarily mean a rapid decline in housing prices. However, it should be realized that circumstances can change dramatically, and it becomes extremely difficult to make accurate predictions. Nevertheless, I expect either price growth or stability in the Dubai real estate market in the coming year.

Investment opportunities

If you are interested in quick return investments, now is a great time to enter this field. Do you want to know what is the minimum investment threshold for new investors in the Dubai real estate market?

• Starting amount.Experience shows that the starting amount to start investing is approximately 250 thousand dollars.
• Investment Attractiveness.This is due to the fact that only properties located in popular tourist areas or the city center can be considered truly investment attractive.
• The demand for real estate.This kind of real estate is in high demand and guarantees a decent rental income or profitable resale.

Investments in new buildings

Nevertheless, in new buildings that are in the process of construction, you can enter with smaller funds - from 70 to 100 thousand dollars. In the case of fresh projects that are just beginning their realization, it is possible that the sale of real estate will take place in half a year. The expected increase in value in such cases is about 5-7%.

Taking into account that the full amount will not have to be paid immediately, the investor's income from the investment may reach 15%. If the investor decides to realize his share after a year, the approximate profit will be 20-30% of the invested funds.

Purchase of real estate for personal use

If we talk about buying real estate for own residence, long-term rent or just to save capital, then it is quite adequate to talk about the minimum investment of 100 thousand dollars. Thus, Dubai continues to attract both investors and people looking for housing, which makes it a dynamic and interesting real estate market.

Conclusion

Analyzing the current situation in the Dubai real estate market, I understand how unique this is as an investment destination. The market continues to grow steadily despite rumors of a possible “bubble”. I understand that there are risks in this sphere, but current trends and the level of demand show that investment in Dubai real estate remains relevant and profitable.

It is important to note that Dubai has always been and remains a center of attraction for investors due to its highly developed infrastructure, stable political situation and favorable climate for doing business. I am impressed with the government's proactive efforts to create a convenient environment for foreign investors, including:

• Tax benefits
• Job creation programs

All of this contributes to further economic development and more residents and investors in this amazing city.

Undoubtedly, potential buyers should be persistent and look into the future, assessing not only the current situation, but also the anticipated growth in the coming years. Designing new large-scale real estate projects and creating a comfortable business environment confirm that Dubai retains its status as one of the most attractive investment destinations.

Prospects for investors

Therefore, summing up, I can say that now is a good time to think about buying real estate in Dubai. The market offers not only promising properties, but also the opportunity to become part of a rapidly developing city that is ready to welcome new residents and investors.

Despite possible fluctuations, I assure you that interest in Dubai real estate is unlikely to wane in the coming years. Stay tuned to the changes in the market and get ready to take advantage of all its benefits!