Thinking about investing in off plan? Here’s our expert take
Two of our most seasoned consultants (and popular podcasters) say Dubai investors should be reassured by forward-looking policies.
As we sit in 2024, Dubai's real estate market is teeming with opportunities for those looking to invest in or purchase property – and this enviable situation has been built on ambition, resilience, and a ‘can do’ approach by the government.
The evolution of Dubai's real estate landscape since 2008 has been extraordinary.
Through the efforts of the Dubai Land Department (DLD) and Real Estate Regulatory Agency (RERA), the market's transparency and investor confidence have risen considerably.
While some investors may have lingering concerns – especially those wary of past experiences with off plan properties – the haus & haus experts stress that recent changes in the Dubai market have alleviated many of these worries.
“The introduction of the escrow law ensures that all funds for off plan projects are placed in an escrow account, directly addressing concerns related to project completion. These changes indicate a more mature and stable market environment. Moreover, the diversification of Dubai's economy – highlighted by significant growth in non-oil sectors like tourism, technology, and finance – reduces the city's vulnerability to global oil price fluctuations,” says Steven Leckie, Associate Director – Off Plan & Investment, haus & haus Real Estate.
Plus, the 2040 Urban Master Plan, which envisions expansive development in residential, commercial, and public spaces, underlines the government's commitment to sustainable urban growth.
“For investors previously impacted by the market's volatility, these developments could offer reassurance about re-entering the Dubai real estate market with a long-term perspective,” Leckie adds.
When comparing Dubai to other international property investment hot spots, there are several advantages.
Beyond offering higher rental yields and lower ownership costs, Dubai's strategic geographic location serves as a bridge between the East and West, providing a unique advantage in attracting international businesses and expatriates.
“Additionally, the city's investment in world-class infrastructure, including airports, public transportation, and leisure facilities, enhances its appeal as a global city for living and doing business. The absence of capital gains tax and income tax on rental yields for individual owners in Dubai further enhances its attractiveness, especially when compared to the tax implications in markets like London, the US, and Europe,” Leckie says.
These factors, coupled with the UAE's stability and forward-looking policies aimed at attracting foreign investment, such as long-term residency visas for investors, contribute to Dubai's competitive edge as a property investment destination.
What about advice for those who have never invested before?
“It’s important to deal with a reputable agency with a strong track record, transparent communication, a comprehensive understanding of the local market dynamics, and one that is not affiliated to a developer, so you know you’re getting genuinely impartial advice,” says Paul Sharland, Associate Director – Off Plan & Investment, haus & haus Real Estate.
“Ideally your agent will speak the same language as you so nothing is misunderstood, and you should look to work with a company that genuinely thinks about the purpose of your investment – whether you’re buying to sell or buying to rent out.”
The Dubai market is now 22 years old, well-regulated, and protected. “Since September 2008, the government started implementing comprehensive regulations to bring stability to the market, introducing safeguards and protections to property investors,” says Sharland.
With prices going up, do investors feel they have missed the boat?
“Prices have increased significantly since 2021 but they were underpriced anyway before due to a market dip,” says Sharland.
"The price increase we have seen post-covid is a price ‘correction’ / market recovery. We are now seeing a slower growth rate which indicates a mature market with expected growth of 8-10% in 2024. Dubai property is certainly not expensive when compared to other major markets – in fact, it is positioned at 90 on the Numbeo cost of living index.”
Dubai's reputation as a safe and secure city, with a high standard of living and a multicultural environment, makes it a preferred choice for international investors and expatriates.
“This cultural diversity and safety contribute to the city's dynamic real estate market, appealing to a broad spectrum of investors and residents. The population is growing exponentially, and forecasters predict that developers of off-plan property in Dubai will be playing catch up with demand for the foreseeable future,” says Leckie.
