Over the past few years, Italian investment in Dubai’s property market has surged, signalling a significant shift in global real estate dynamics.
Historically, the majority of overseas investment into Dubai real estate has come from India, Russia, and the UK. However, recent trends show a remarkable increase in investment from Italian investors, as well as their Western European counterparts from Germany and France, entering the market in record numbers.
By 2020, Italian investors already owned USD 1.1 billion worth of Dubai property, underscoring the growing momentum of Dubai’s real estate market. This ongoing trend highlights the increasing confidence of Italian investors in Dubai’s economic prospects and the diverse opportunities it offers – particularly given the volatile domestic market they have endured in Italy in recent times.
The Italian property market experienced only modest growth in Q3 2024, with nationwide house prices rising by 2.2% to an average of EUR 1,851 (USD 2,033) per square metre (sq.m). Quarter-on-quarter, this represents a 1.6% increase (1.3% inflation-adjusted) in Q2 2024.
In Rome, the nation’s largest market, the average home price was EUR 3,036 (USD 3,334) per sq.m, showing a minimal increase of 0.9% from the previous year (0.2% inflation-adjusted). Meanwhile, the prime secondary markets of Milan, Bolzano, and Venice are the most costly assets with current average house prices of EUR 4,988 (USD 5,478), EUR 4,610 (USD 5,063), and EUR 4,529 (USD 4,974) per sq.m, respectively.
Despite the overall house price index rising by 2.94% year-on-year to Q2 2024 (2.17% inflation-adjusted) and a quarterly rise of 3.23% (2.97% inflation-adjusted) in Q2 2024, the return on investment remains lacklustre. Consequently, it’s not surprising to witness a growing interest from Italian investors in Dubai’s property market, which offers promising returns and opportunities.
Dubai is widely recognised as the strongest-performing property market in the world since 2019. Investors have observed double-digit annual growth post-pandemic, and although the rate of appreciation is starting to slow – experts believe the long-term outlook for Dubai property looks promising. This positive sentiment is due to the broader strength of the UAE’s economy, supported by extensive government initiatives to continue to expand the emirate’s working population.
Dubai market sentiment for Italian investors
In Q3 2024, Dubai’s property market demonstrated remarkable resilience and growth:
Italian investors might have initially doubted the potential high returns that Dubai’s real estate market can offer. Such scepticism is understandable given the boom-bust and speculative character of the UAE market in years gone by.
However, the landscape is undergoing a significant transformation, presenting a distinct shift for Italian investors eyeing real estate opportunities. Like investors from many other nations, Italians now view Dubai as a maturing and increasingly robust market.
The Dubai 2040 Urban Master Plan is a government-backed blueprint guiding the emirate’s urban development for the next two decades. It focuses on sustainability and quality of life, aiming to make Dubai the world’s best city to live in. This plan supports the projected population growth from 3.3 million to 7.8 million by 2040 and aligns with Dubai’s strategic economic priorities and future needs. It’s being implemented in phases with comprehensive strategies, principles, policy directions, and initiatives.
This population growth, and the demand for property it brings, supports long-term ROI via both capital appreciation and yields.
While investors in Italy have averaged annual yields of around 2.6%, those with assets in Dubai are recording about 7% rental return.
Bilateral trade surge
The latest visit by Dubai Multi Commodities Centre (DMCC) to Italy highlights the significant rise in trade between the two nations, with bilateral trade reaching an impressive USD 9 billion in 2023.
The UAE has retained its status as Italy’s largest trading partner in the Arab world. This growth in Italian exports is a testament to the UAE’s favourable business environment, which boasts unmatched infrastructure, a strategic location, and a robust regulatory framework for Italian companies to capitalise on.
Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, remarked, “With almost USD 9 billion in bilateral trade in 2023, the UAE is Italy’s top trade partner in the region and our relationship is strengthening rapidly every year.
“We currently house over 500 Italian companies in our district, who are drawn to DMCC’s value offering and a business environment that offers business-friendly regulation, world-class infrastructure and a highly competitive 9% corporate tax rate. From technology and jewellery to precious stones, coffee and energy, I look forward to seeing more Italian companies join DMCC in the coming years as we continue to leverage our warming trade and investment ties.”
This burgeoning relationship is expected to attract even more Italian companies across various sectors to Dubai, further solidifying the economic ties between the two countries.
Key sectors driving trade
Machinery, precious stones and metals, aluminium, tobacco, vehicle parts, footwear, and leather goods are just some of the key sectors bolstering international trade between the UAE and Italy. This exchange spans plant automation systems and creative design, highlighting diverse avenues for collaboration.
Increased Italian exports to Dubai
Italian exports to Dubai and the wider UAE increased significantly in 2023, hitting USD 7 billion – an increase of over 10% year-on-year. Furthermore, driven by strong growth in technology and luxury goods exports, the 2024 rise is expected to be over 20%.
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