UAE new buildings for foreigners: Reasons to purchase real estate and how to choose it

Prices for apartments in off-plan development projects in Dubai and throughout the UAE have been steadily rising over the past years. Dubai and Abu Dhabi remain the most attractive investment destinations for foreign buyers. This article analyses the country's new real estate market and provides expert advice on how to make profitable deals.

Content:

• Current UAE real estate market statistics
• Abu Dhabi
• Dubai
• Real estate market prospects in 2024
• What do you need to consider when choosing and buying real estate in the UAE?
• The main risks of buying foreign real estate

Current UAE real estate market statistics

Let's have a closer look at the real estate market statistics using the examples of the two most actively developing emirates of the country.

Abu Dhabi

As per the Department of Municipalities and Transport (DMT), Abu Dhabi witnessed a significant increase in total sales of both residential and commercial stock in 2023:

• The volume of transactions reached a record 13,298, compared to 7,602 in 2022, demonstrating a 75%. increase;
• Residential real estate accounted for 97% of the total volume of deals and about 85% of their total value;
• The total transaction value amounted to AED 44 billion, marking a 120% increase compared to AED 19.9 billion the previous year.

This growth reflects increased investor confidence in the Abu Dhabi market and is the result of the government’s efforts to improve the emirate’s investment appeal and develop its infrastructure.

Dubai

The number of sales transactions in Dubai in 2023 reached 133,134, showing a significant increase compared to the 96,459 signed contracts in 2022. This growth, at 38%, marked the highest ever observed, largely due to the outstanding results of off-plan deals.

Sales contracts were concluded in 178 districts of Dubai during the year, with 55.2% of all transactions occurring in 10 key communities. A record number of deals were registered in 2023, totalling AED 411.74 billion, significantly higher than in 2022 (AED 264.34 billion). The market value of sales agreements increased by 56% compared to last year, setting a new record.

Real estate market prospects in 2024

"Dubai, a key commercial and tourist hub in the Middle East, is expected to see average housing prices increase by 5-7%, while Abu Dhabi is projected to grow by 3-5%," says Haider Tuaima, Director and Head of Real Estate Research at ValuStrat.

According to this expert, the market of real estate in Dubai will continue to demonstrate strength in transactional activity, price growth and rental rates over the next 3-4 months. However, there may be a turning point by the middle of the year, presumably in the summer, which will primarily affect luxury housing. It’s unclear whether this will balance the market or lead to price adjustments. However, the dynamics of the luxury property market are likely to change.

Experts anticipate that new projects will be commissioned this year, but demand is expected to exceed supply, thereby supporting the price level.

As per Mr Tuaima, developers plan to introduce 120,000 housing units into operation in Dubai over the next five to six years, with an annual commissioning rate of between 20,000 and 30,000 units. Meanwhile, Abu Dhabi plans to bring 5,000 units into operation.

"Dubai’s housing market prospects for 2024 are assessed as positive due to the sustained interest of both local and international investors", notes Nick Whitti, CEO of Chestertons Mena. He expects demand to shift towards ready-to-move-in properties rather than off-plan ones, as they "provide a faster return on investment through leasing."

Expert opinions confirm the fact that apartments in development projects in Dubai remain a potentially profitable investment for overseas buyers.

What do you need to consider when choosing and buying real estate in the UAE?

Before deciding to buy a foreign home, it’s important not only to study the market in detail, its trends and offers, but also to have a clear plan of action. Below are expert recommendations on how to choose a residence in a residential complex in Dubai and the main points on how to own a property:

• Determining the purpose of the purchase: It’s important to have a clear idea of whether you want to purchase an apartment for permanent residence, resale or rent. If your goal is to live on your own property, you need to choose the type of property that best suits your needs, whether it's a flat, townhouse, apartment building or villa in a low-rise area of Dubai. It’s important for families with children to have playgrounds, kindergartens and schools nearby. The interests of potential tenants should be paramount when buying a home for rental purposes. They prefer new development projects in Dubai near the beach or popular attractions with developed infrastructure and amenities.
• Determining the market value: The easiest way to do this is to calculate the price per square metre, considering that some developers may include the area of balconies and technical rooms in it.
• Understanding the difference between primary and secondary markets: The UAE is actively promoting its real estate sector, offering a wide range of both new off-plan projects in Dubai and secondary housing. The primary and secondary markets differ in equipment and quality of communications. Secondary real estate needs increased attention, as the technical condition of the housing may not meet the stated features.
• Purchasing a home in the UAE should be inspected personally or checked by a trusted real estate agent. The legislation allows you to acquire real estate online from a qualified realtor. It’s crucial to get acquainted not only with the property but also with the surrounding infrastructure, with a focus on tourist spots, which can be an advantage for young people and a disadvantage for families with children and pensioners. Obtaining comprehensive information about the building and the surrounding area is a prerequisite before purchasing.
• Accounting for transaction and property maintenance costs, especially when considering the secondary market.
• Choosing an intermediary is a key point: Using a licensed agent with extensive experience and positive customer feedback improves your chances of success.

The main risks of buying foreign real estate

The main risk for foreign investors is the lack of information about the place and local legislation. Given the numerous changes in the UAE in recent years, it’s extremely important to consult with a licensed realtor specialising in the region before making decisions.

Meanwhile, the main opportunity for investors lies in the potential for a significant increase in invested capital through purchasing apartments in Dubai or other popular emirates of the country. The UAE is one of the leading countries where the cost of housing is growing rapidly, attracting numerous tourists and expats, contributing to a high return on investment. Additionally, buying a home can serve as the basis for obtaining a so-called "golden visa," granting the right to permanent residence, which remains important if you are considering relocation.