Dubai Land Department statistics reveal that Chinese investments in the emirate’s real estate sector increased 300% in 2014 compared to 2013 and, since 2011, Indian investors have ploughed $14.4bn into the market.
It is known that the real estate market in Dubai grew at a dynamic pace in 2013. What is being witnessed now is the stabilising period, which is attracting global buyers and investors. The Dubai government has not imposed any tax on property rental income, which means that investors can make free and clear profit on rents. Similarly, with zero percent capital gain taxation and no property tax, the profit margin is much higher, making Dubai real estate a far more rewarding venture compared to other countries.
According to a recent Research and Markets study, the UAE is home to the second highest number of millionaires in the Middle East with 72,100, which means every 125th person in the country is one.
As per Reidin.com data, Dubai saw the launch of 14 projects in the first five months of 2015 compared to 37 launches announced during the same period last year. A total of 4,800 units were launched from January to May 2015 compared to 11,288 units in the same period last year. Such statistics indicate a favourable background for the luxury real estate sector, including investor interest from the neighbouring countries.
The major attractions luring more investors, in my opinion, are high rental yields and timely project completion. Rental values grew on average by 1% across Dubai during Q1 2015 and 5% over the same period last year as per the Dubai real estate market overview by ADIB. The UK-based consultancy Knight Frank noted in March 2015 that $1mn could buy 145 square metres of prime property in Dubai compared to 96 square metres in Mumbai. Such advantages make Dubai the obvious choice. The UAE property portal Bayut.com indicated that the emirate’s residential market offered average annual rental returns of over 7.2% of the property value, which is even higher than London’s.
Recession or drop in oil prices does not deter the UAE because of its innovative and progressive policies. Minister of Economy Sultan Bin Saeed Al Mansouri declared recently that the UAE government plans to increase the contribution of the non-oil sector to 80% of the nation’s gross domestic product (GDP) from the present figure of 70% in the next 10 to 15 years.
Interestingly, buyers from countries like China and India increasingly see Dubai as the best choice.
Compared with some major Chinese cities like Beijing or Shanghai, the rental returns from Dubai are better. In fact, Chinese investments in Dubai are said to be setting new records. Dubai Land Department statistics reveal that Chinese investments in the emirate’s real estate sector reached AED1.28bn last year, which constitutes more than 300% rise compared to 2013. Regarding India, Sultan Butti Bin Mejren, general director of Dubai Land Department has been quoted as saying that in the past four years, Indians have invested more than $14.4bn in Dubai properties. Dubai would be hosting World Expo 2020 and it marks as a security for its economic growth that will bring profitable dividends in both the long and short runs, particularly lucrative rental yield that ranges from four to 7% per annum.
The oncoming mega event is changing the face of the region and creating new hotspots. Bayut revealed that Dubai Marina retained its top position for another month in September this year exhibiting an 8% increase in interest compared to August. Jumeirah Lakes Towers (JLT) came second with 5% more search hits in the same month. Dubai land overtook Downtown Dubai for the third spot gaining two positions to become the third-most popular locality for renting apartments in the emirate, according to the report. We foresee a rise for the affordable market segment due to projects being undertaken by the government.