What Are The Dubai Real Estate Myths?

Fact: Dubai's real estate market has seen a lot of fluctuations in recent years which makes the assumption that the market is very volatile. However, this is not true as the real estate market has seen an uptick. 

According to Dubai Land Department's Q1 2022 report, the real estate sector of Dubai has seen immense growth. The market has shown a great sign of stability recording a growth of around 46.6% in the first quarter of 2022. Also, reports suggest that around 60,000+ properties were sold in 2021 even though there was covid. 

This growth has been steady since 2020 and there was an increase of 20.8% in the last two tears. Dubai’s real estate market has seen investment from international investors with maximum inflow from India, China, and British that makes it a favorable destination for foreign investors. 

Fact. The myth that it is difficult to buy property in Dubai is incorrect. As a matter of fact, the real estate market is different from other countries. The purchase policy is a bit different and straightforward which makes it perfect for foreign investors.  The real estate market has seen immense growth equal to around 40 to 44%. 

Also, the government has rolled out a range of initiatives to make the investment attractive. The major initiative that the government has introduced is the free-hold property rule that makes it cohesive for investors. Additionally, the government has also launched a remote property registration facility that enables investors to book a property irrespective of their location. 

Fact: Dubai is considered one of the safest cities in the world as per recent reports. In 2021, out of all the cities, Dubai was considered one of the safest cities in the world. According to the 2021 Safe Cities Index, Dubai was ranked at 11th safest city in the world. The city was considered safe for women for its stringent punishment rules, active police, and advanced infrastructure.

Not only for local people but Dubai is also considered very safe for women as well. The government has invested heavily in deploying women-centric policies in the city. There are ladies' taxis, and separate metro carriages for women that make it safe. Also, there are several beaches in the city that are reserved only for women.

Fact: The COVID-19 pandemic has seen a significant impact on the global economy as well as the UAE’s economy. Amidst this global chaos, real estate has shown a remarkable uptick and resilience for growth even during the pandemic. If we compare the real estate growth in the pre-COVID and post-COVID eras then not much difference can be found. 

Fact: This is one of the myths that have been squashed by the real estate reports of Dubai. Prime properties have been desirable owing to the high ROI but non-prime properties have gained immense prominence due to the high returns. As per the data available with Property Finder, non-prime properties in Dubai have seen an uptick in the last three years. 

This is because of the high rental yield they are offering as compared to the prime properties. As per the data, non-prime properties are offering a rental yield of 7.3% as compared to the 5.4% offered by prime ones. Another thing that makes it an attractive option is that it is more affordable and has low maintenance charges. This is one of the reasons that investors are parking their funds with nonprime properties for better returns on investment. 

Reports suggest that properties in Dubai Marina, Downtown Dubai, Dubai Silicon Oasis, Jumeirah Lake Towers, and International City are popular amongst investors. 

Fact: Yes, there are no direct taxes in Dubai. The individuals do not have to pay any kind of taxes on capital gains, profits or property. However, there are some small transactions like exports, and excise duty that comes under the tax policy. The government has not introduced any income tax on property purchases.

However, there is a 5% VAT tax that one has to pay during property transactions. Other than this, no extra registration fee, the agent fee is applicable to the real estate market in Dubai. 
 

Fact: Dubai government has issued some restrictions on foreigners willing to obtain a mortgage. However, buying properties only with cash is a myth. There are several banks in Dubai that offer mortgages to foreigners subjected to certain restrictions. The most common conditions are minimum income and maximum loan-to-value ratio. However, the banks have a very transparent policy that makes it feasible for investors. 

Fact: Like any other real estate market, Dubai also has some hidden issues and pitfalls that investors should avoid. The only way to do this with the right research is to make the buying process more transparent. Although, there are no major hidden atrocities due to the transparent policies and regulations that protect buyers’ interests. The major pitfalls are maintenance costs, taxes, and a high cost of living. Other than this, it is very important to find reputed real estate agents to avoid forgery. 

Fact: Brands play a very significant role in the quality of the property you are investing in. Several research suggests that properties developed by well-known developers offer better rental yield and future ROI. The label of a brand increases the demand for the property as compared to non-brands. 

Data suggests that branded real estate properties in Dubai record an average sq ft of AED 2475 as compared to non-brands having an average price of AED 1450. Also, the branded property is shown to generate ROI equal to 6.4% which is 1.3% more than the non-branded ones. This in turn accounts for faster occupancy and sales trend. 

Fact: Instead of waiting for the market to become favorable, investors should focus on identifying properties that offer attractive returns on investment. Waiting for the market to become favorable is not always the best strategy for real estate investment. There is no perfect time to enter the market for grabbing a real estate investment. It has been seen that investors who hold properties achieve better ROI as compared to others. Hence, investors should focus on a long-term approach and the fundamentals of the property rather than short-term market fluctuations.

Fact: Dubai has been one of the major investment hubs for the wealthy over the years. This is mainly due to the relaxation in the amenities, easy policies, and special provisions for the ex-pats. Reports suggest that property in Dubai is 80% cheaper than that of other Tier 1 countries like the UK, the USA, and Australia. This is mainly due to the range of properties catering to every budget and preference. Check out the average price per sq ft for all the major cities in the table below.

In conclusion, the Dubai real estate market has been subjected to several misconceptions due to the limited number of resources and data available. However, to prevent any fraud the investors have to do their own research. It is advisable to work with a reputed real estate agency for the right guidance. We hope this article was able to debunk major myths. If you are looking forward to investing in Dubai’s real estate market then do connect with Dubai Housing experts today. With our team of professionals, you will get the right guidance and knowledge about the market.