Dubai is a vibrant and thriving emirate – always high on the wish list of those in search of a luxury escape. But this city is more than just sunshine and stunning scenery, it’s also a destination with sound investment potential according to one property professional who has just set up a brand-new real estate company in the emirate.
Ben Stafford is CEO of new, Dubai-based estate agent INICIO, which has launched to meet the growing demand for off-plan property investments in Dubai.
“Real estate is hugely profitable in Dubai,” says Ben. “Thanks to globally high rental yields, as well as low taxation, Dubai is attracting property investors from all over the world.
“It is a popular destination with both tourists and expatriates relocating to the city which means there is no shortage of tenants looking for all types of accommodation. With the housing market on the increase, in my opinion, now is definitely the right time to invest.”
Here, Ben shares the seven key reasons he believes there has never been a better time to purchase a buy-to-let in Dubai.
Globally high rental yields for investors
The expected rental yield is one of the most important factors for deciding if a property investment will be financially sound. It’s paramount that a rental investment will generate enough monthly cash flow to meet and exceed any expenses such as mortgage payments, ongoing bills and service charges that as a landlord you will be liable for.
In the UK, the rental yield for a buy-to-let property averages at around 3.6 per cent, with some regions and external factors offering a marginally higher percentage. Dubai, in comparison, offers a globally high rental yield – up to 13 per cent for some properties.
Annual rental fees
In Dubai, tenants typically pay rent annually rather than monthly. Not only does this offer excellent up-front returns for investors but it’s guaranteed income.
There is no shortage of potential tenants either, with the population set to almost double by 2040. Rental prices have been increasing month on month, with that trend set to continue, with such a high demand in the rental market it offers a lucrative option for investors.
ZERO rental, resell or inheritance tax
Another benefit, and that is perhaps one of the biggest selling points of all, is that there is zero inheritance tax when the property is left to loved ones. Whereas in the UK, the standard Inheritance Tax rate is 40 per cent – charged on the part of the estate that’s above the threshold.
An emerging fast growth market
Dubai, as we know it, is just 50 years old; the emirate is in its infancy in comparison to regions such as London where the property markets have enjoyed continued growth for many years. Widening a real estate portfolio to Dubai, gives investors the chance to capitalise on the early stages of the region’s growth.
According to figures published in Arabian Business, the UAE property market, and particularly that in Dubai, saw record-breaking transaction numbers over 2022 with over 97,000 property transactions totalling €67.38bn. The economy is strong and set to grow by a predicted 2.5 per cent, and house prices, it’s argued, could continue to rise by up to 25 per cent.
In Dubai, there is a strong long-term asset appreciation potential. Imagine the potential return for having purchased real estate in the first 50 years of London’s growth?
A flourishing off-plan sector
For investors, off-plan properties can offer the highest return. For those looking to diversify an existing property portfolio or have a property-based financial goal in mind, an investment property in Dubai could offer the ideal solution.
Buyers can take advantage of a great deal of benefits when purchasing off-plan properties in Dubai. These include lower prices compared to completed developments and resale properties along with tailored interest-free payment plans.
Higher capital appreciation is another positive – usually the nearer to completion, the higher the value of the property, meaning even if sold before the development is finished, with most off-plan purchases there is still a significant profit to be made.
Flexible payment schemes in Dubai also mean there are more options to finance the purchase. Investors can take up a payment plan direct with the developer. Typically, these are interest free payment plans spread over three years which often only require 50 per cent of the balance paid leading up to completion. The balance due on completion can be fulfilled with a mortgage successfully even as a non-UAE resident.
No agency fees for rentals
In the UK, it’s typical for landlords to be charged a fee from letting agencies for the services they provide such as tenant finding, reference checks or property management but in Dubai there are no agency fees on rental returns for landlords, the tenant will pay any fees due to the agency.
In Dubai, every landlord can take advantage of free listings, marketing support and tenancy acquisition.
The lifestyle
Dubai has everything – sun, sea, a city with a thriving hospitality scene and a skyline to rival any city in the world. It’s one of the cleanest and safest places to live globally.
It is also a destination with big ambitions and a flawless leadership that strives to be the biggest, best and most successful at everything it does. In relative terms it’s a very young city, many would argue it is at the start of its growth trajectory.
To find out more about the latest developments and further advice on purchasing a property in Dubai with INICIO click here.
Disclaimer: Individual situations may vary when it comes to tax owed, it is always advisable to speak with your personally appointed professional tax expert.
All imagery supplied by INICIO.
