Investing in overseas real estate is a great solution regardless of whether you are planning to move to the country or are a property hunter. The housing in the United Arab Emirates is in high demand among foreigners. The most popular destination for foreign property buyers is Dubai. It is a metropolis with a highly developed infrastructure and a wide range of real estate offers both among new projects and secondary housing. Studying the local real estate market allows you to purchase real estate in Dubai and other regions of the country with maximum profit. In this article we discuss the most popular property options and market trends suggested by real estate experts.
Table of contents:
- Recent changes in the country's real estate market
- Resale property versus new projects
- Buying property by foreigners
- Apartment prices in the United Arab Emirates
- Villa and townhouse prices
- Average cost of housing per square meter
- Housing market prospects
- Return on investment
- We help you choose real estate in the UAE
The maximum growth in sales was reached at the turn of 2011-2012, when the rise in house prices in the UAE exceeded several tens of percent. Later, the situation with the global economy worsened, affecting the cost of oil. As a result, property prices began to fall. The pandemic also had a direct impact on demand. Because of the closure of borders and uncertainty about the prospects, the number of investors decreased. A radical change took place in early 2021, when the cost of residential properties began to rise. Experts offer several possible reasons for the changes:
- Cancellation of lockdown and normalization of the situation with coronavirus thanks to total vaccination.
- Favourable conditions for expats. The authorities are developing various programs to attract foreign investments, including simplified schemes for obtaining visas for different categories of applicants.
- Stabilizing the economy. The UAE has long ceased to depend on oil production. The country is actively developing and a major part of the income comes not from oil, but from the tourism sector. The development of technology creates jobs and fuels the demand for housing.
Many foreigners from different countries who have already moved to the UAE or have invested in the local housing explain their choice by the following reasons:
- Resale property is protected from any risks. With the total control over the construction process and financing of its stages, there is still a risk that the delivery of your off-plan property will be delayed.
- Buying an off-plan property does not allow you to apply for a resident visa until the property is completed and is ready to move in. Buying an apartment or house worth over EUR 229,258 allows you to obtain a three-year visa if you pay for the property in cash.
- Property liquidity. While homes sold off-plan acquire the final value only after they are finished, secondary units are sold at market value. This increases liquidity in cases where the house needs to be resold shortly after the purchase.
The United Arab Emirates consists of seven emirates, each with a large city. Expatriates should remember that they are not able to purchase property in every emirate. Even the largest cities in the state have communities where only leasehold ownership is available. The lease term is 99 years and the lease rights are transferable to third parties. However, most investors prefer to purchase freehold properties, which ensures more confidence in potential returns and liquidity. The number of freehold communities is quite large. This allows you to choose any real estate in the UAE you like.
The pricing directly depends on the specific emirate, the location of the apartment, its area and amenities. On average, the prices are as follows:
- A studio apartment in Dubai can be bought for 265,000 euros. Two-bedroom apartments cost from 568,000 euros while a penthouse can be purchased for 4,150,000 euros.
- In Abu Dhabi, you can find a studio apartment for 185,000 euros, the price for a three-bedroom apartment starts from 500,000, a penthouse is sold for 41,000,000 euros.
This demonstrates a significant range of prices, allowing you to choose between low-cost housing and luxury properties. With the seeming economic crisis, luxurious options are becoming more and more popular.
In this segment, the cost also varies significantly and depends on the location and living space. The demand for villas in 2021 has doubled, which has led to a rise in prices. The most expensive villas have been sold in the past few years. In Dubai, you can buy a villa in the price range from 185,000 euros to 21,000,000 euros. A townhouse in Abu Dhabi can cost you 287,000 euros. Sharjah offers similar prices. You can buy a four-bedroom townhouse for 381,000 euros. Local residents, nationals of India, Pakistan and the UK are the leading buyers.
The United Arab Emirates offer property prices per square meter than major cities in Europe and the United States. This allows you to purchase apartments of a much larger area for the same cost than in London or New York. The average cost of a square meter is 4,983 euros. These are price rates for apartments in large cities, in other emirates prices may be lower. If we talk about villas, their average price per square meter is 5,976 euros. You should keep in mind that the average cost is calculated by adding up the prices of the most expensive and cheapest properties, so you can choose a housing unit for any budget.
Experts predict a further rise in prices from 1 to 4%, depending on a certain area and a type of property. 2021 showed an upward trend in demand for detached houses. This was caused by the pandemic with its closed borders and self-isolation. It is easier to spend time where you can enjoy a wide range of amenities and access to nature.
For the same reason, apartments with panoramic windows and a terrace or a spacious balcony have become more popular. Increased attention is paid to the infrastructure of residential projects. People taught by the restrictions during a pandemic prefer to have a sports club, a sauna, a supermarket in the immediate vicinity. The more developed the infrastructure, the higher the demand for housing and its price.
Analysts believe that the main rise in prices will affect the two largest emirates in the country:
- Abu Dhabi is growing rapidly, expanding its territory and increasing the number of jobs. This contributes to the demand for housing.
- Dubai is expecting an influx of tourists during Expo 2020. The event will affect all spheres of life, push forward the development of different industries and research. It is expected that more and more expats will move to the emirate for permanent residence or work.
Analysts also note that in accordance with the state's development plan for the next 20 years, the number of new projects in the central part of Dubai will be reduced. The reason is the limited land plots. Therefore, ready-made houses will be in high demand.
Resale properties in the UAE offer great opportunities. While apartments in new projects in Dubai are often offered off plan, secondary apartments are ready to move in. There is no need to wait when the construction will be finished and there are no risks of long-term construction. The transaction is completed within a month. After that the property buyer gets the title deed, and they can lease the property. The rental yields are considerably high, and zero property tax allows you to get a net profit.
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