Foreigners in the UAE real estate market in 2023: what, where, and why are they buying?

Foreigners in the UAE real estate market in 2023: what, where, and why are they buying?

Foreign investors have consistently been drawn to the UAE's real estate market, a key factor in the rapid expansion of the nation's entire sector in 2023. Abu Dhabi and Dubai have been the focus of this investment surge. What drives foreign investors to choose real estate in Dubai? This article delves into the underlying factors of this preference.

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Foreigners in the UAE real estate market in 2023

In 2023, Dubai's dynamic real estate market, nestled in the heart of the United Arab Emirates, witnessed a significant influx of international investments. The beginning of the year was particularly noteworthy, with property demand reaching unprecedented levels. February alone saw 8,515 residential transactions, a striking 43.9% rise compared to the same period last year. Cumulatively, the residential market transactions in January and February soared to an impressive total of 17,741.

The surge in demand has markedly impacted property values and rental rates. In Dubai, inhabitants are facing rent increases of over 50%. This surge has led to a notable scarcity in available properties, with the Dubai Land Department noting only an 8% availability – a figure not seen since 2008. Consequently, rents and selling prices have skyrocketed. According to CBRE, the average selling price has increased by 11.5% in the year leading up to February 2023. Yet, this average masks the extraordinary gains some sellers are witnessing, with certain properties doubling in value in just one year.

In the UAE, the real estate sector is abuzz with heightened demand for opulent properties, especially upscale villas and apartments in Dubai. A standout location experiencing this trend is The Palm Jumeirah, an impressive man-made archipelago. This area is highly sought after by affluent individuals looking to rent or purchase, particularly due to its exclusive beachfront homes. As of February 2023, the average yearly rent of an apartment on the Palm Jumeirah stood at 260,467 dirhams (approx. $70,920), while villas commanded an average rent of 1,017,614 dirhams (around $277,079).

Reasons for foreigners' interest in UAE real estate

Reasons for foreigners' interest in UAE real estate

In 2023, Dubai has established itself as a leading destination, captivating international real estate investors. This surge in popularity is driven by several key factors:

  • Economic resilience and growth. The United Arab Emirates' economy, bolstered by its substantial oil reserves and a wide array of investments, creates a strong and reliable foundation for endeavours in the real estate sector.
  • Investor-friendly policies. The United Arab Emirates' administration actively fosters an investor-friendly environment, highlighted by the introduction of extended-term visas for real estate purchasers and the liberalisation of property ownership regulations. These policies allow international investors the opportunity to own freehold properties in designated areas.
  • Luxury and high-end amenities. Known for its opulent lifestyle and premium amenities, the UAE draws affluent investors seeking upscale residences or profitable rental opportunities.
  • Global business epicentre. Dubai's reputation as a worldwide business and financial centre attracts a steady flow of professionals and companies, fuelling the demand for both residential and commercial properties.
  • Tourism and expat appeal. The UAE's dynamic tourism industry and its welcoming stance towards expatriates, combined with a high standard of living and cultural diversity, enhance its attractiveness as a place to live and invest.
  • Safety and advanced infrastructure. The country's commitment to safety and its contemporary infrastructure, including leading-edge healthcare and educational facilities, further elevate its desirability.
  • Geographical advantage. The United Arab Emirates, strategically nestled at the junction of East and West, emerges as a pivotal hub for global investors and businesses.
  • Tax incentives. The absence of personal income and corporate taxes in most sectors, with the exception of oil companies and foreign banks, is a significant lure for investors.

Dubai, within the UAE, emerges as a prime destination for international real estate investment in 2023. This trend, driven by a unique blend of factors, is fueling a surge in both the demand and value of properties in the region.

The current situation in the UAE real estate market

The current situation in the UAE real estate market

Recent trends reveal a rapid sale of properties under construction in new projects, often within a day or a few weeks. Additionally, affluent buyers are acquiring entire floors in residential complexes, aiming to resell them as separate units.

Per the latest report from the Dubai Land Department, the emirate experienced an extraordinary surge in property transactions during the initial nine months of 2023: 116,116 transactions worth AED 427 billion (USD 117 billion). These figures not only underline the region's stability and appeal to investors but also mark a notable growth. Compared to 2022, there's a 33.8% increase in real estate transaction volume and a 36.7% hike in property prices.

Leading the high sales volume was Al Barsha South Four, registering 10,351 transactions. The other areas with significant deals include Dubai Marina (9,071), Business Bay (7,414), and Wadi Al Safa 5 (5,602).

The top-10 list also features Al-Merkad, Al-Taniya 5, Burj Khalifa, Al Khiran First, Hadaeq Mohammed bin Rashid, and Jebel Ali First.

In terms of transaction value, Dubai Marina is at the forefront, with purchases surpassing AED 36.7 billion (USD 10 billion). Palm Jumeirah follows with AED 28.51 billion (USD 7.76 billion), then Jebel Ali Industrial First with AED 27.93 billion (USD 7.61 billion), and Wadi Al Safa 3 with AED 25.33 billion (USD 6.89 billion).

Dubai Marina also leads in mortgage transactions, with 1,186 contracts, followed by Al-Taniya Five, Al Barsha South Four, and Burj Khalifa.

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Discover your dream property in the UAE!

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