International Investment

INVESTING IN DUBAI
FROM ITALY

Italian investment into the Dubai property market

Italian investment in Dubai property has become much more significant over the past few years.

Most overseas investment into Dubai real estate has historically come from India, Russia and the UK. More recently, Italian investors, alongside their other Western European counterparts such as Germany and France, have entered the market in record numbers. 

Italian property investment

Average property prices in Italy for 2023 are USD 380,000. This figure represents a 2,000-square-foot home and a price per square foot of USD 190.
Investors will note that asking prices are affordable in Italy compared to other European markets – even nearby Mediterranean markets, including Spain and Portugal.

However, this also correlates to a similar investment potential within the market. Most Italian investors struggle to achieve capital growth of a modest 3% per annum.

Given this lacklustre ROI, it is unsurprising to note the recent surge of Italian activity in Dubai. 

Italian investment in Dubai real estate

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

  • Residential values soared by 5.6% in Q1 2023, marking the 9th consecutive quarter of ascension and showcasing sustained growth.
  • Values surged to stand 20% higher than in Q1 2020, showcasing a substantial rise over the past few years.
  • Average prices remain below the 2014 peak, indicating immediate prospects for further growth.
  • Prices experienced a robust annual surge of 13%, reflecting steady yearly growth.
  • Apartment prices rose by 5.7% to approximately AED 1,230 per square foot in Q1, registering a 15% hike compared to Q1 2020. 
  • Villas surged by 5.1% to reach AED 1,450 per square foot in Q1, exhibiting a 15% increase from Q1 2022. Since January 2020, villas have seen a remarkable 44% rise, showcasing resilience post-COVID-19 and outperforming the market.

What do Italian investors need to consider when investing in Dubai real estate?

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 reasons for this are the solid macroeconomic trends and stark supply and demand imbalances within most submarkets across Dubai.

Italians now view Dubai’s property market as similar to London’s circumstances 20 years ago. For many, 2021 was the pivotal moment, as Dubai emerged from the pandemic to lead the property investment world and set record-breaking industry sales transactions totalling AED 151 billion (USD 41 billion). 

Yields for Italian investors in Dubai

While investors in Italy have averaged annual yields of around 3.8%, those with assets in Dubai are recording about 7% rental return. 

Increased transparency attracting newer markets

The work conducted by the Dubai Land Department is another contributing factor towards growing Italian interest in Dubai. A consistent drive for regulatory improvement has resulted in: 

  • Trusted reputation in the region
  • Timely off-plan deliveries
  • Welcoming expat communities
  • Affordable payment plans
  • Full property ownership for foreigners
  • Exclusive amenities on offer
  • High-quality designs and materials
  • An expanded Golden Visa programme

Economic and investment ties between Italy and Dubai

Bilateral trade surge

The bilateral non-oil trade between Dubai and Italy surged to an estimated €8.5 billion in 2022, marking a significant 7% year-on-year growth. These figures underscore the growing economic alliance between the regions.

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.

New diplomatic trade headquarters

The recent inauguration of the Dubai International Chamber’s office in Milan at the Four Seasons Hotel in Via Gesù signifies a pivotal step in enhancing trade and investment between Dubai and Italy. This office, the second in Europe for the Dubai Chamber, aims to bolster Dubai’s status as a global trade hub while facilitating new business ventures in the emirate.

The Dubai Chamber actively seeks to grow bilateral trade relations, identifying and capitalising on new opportunities across priority industries like pharmaceuticals, agribusiness, automotive, and consumer goods.

The establishment of the Dubai Chamber office in Italy heralds a new era of opportunities and expanded business channels for Italian companies and investors, signifying an encouraging foray into new horizons of trade and collaboration.

Increased governmental collaboration

The UAE’s Minister of Economy recently led a nearly 50-member delegation to Italy to showcase Dubai’s economic roadmap. He urged Italy’s private sector to seek opportunities in the UAE, and highlighted the incentives offered by the country to boost growth through platforms such as Investopia and comprehensive economic partnership agreements.

Commenting on the investment talks, Giancarlo Giorgetti, Italy’s Minister of Economy and Finance, said: “We will work alongside our partners in the UAE to enhance bilateral relations and increase trade and investment exchanges in the fields of technology and circular economy, and other areas of common interest.”

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