International Investment

INVESTING IN DUBAI
FROM PORTUGAL

DUBAI: UNLOCKING OPPORTUNITIES FOR PORTUGUESE INVESTORS

Political changes, record-high property prices, and limited supply have historically been prominent features of Portugal’s real estate market. As a result, barriers to entry are higher, and investment opportunities are therefore more limited. Across the globe, however, lies a real estate market teeming with opportunity: Dubai.

Since the city’s 2009 financial crisis, Dubai’s economic recovery has surprised even the most seasoned investors and analysts. What’s more, the real estate market has never been better, making it a prime time to invest. With a stable economy, strong infrastructure, and generous tax benefits, Dubai is giving investors everywhere – including those from Portugal – something to talk about.

With Dubai’s property market expected to continue its upward trajectory, now is the perfect time for investors to capitalise on its promising opportunities. 

DUBAI’S REAL ESTATE BOOM: UNSTOPPABLE AND UNMATCHED

Dubai’s property market has grown for 38 consecutive months—an indication of strong investor confidence. While other markets struggle, Dubai’s peaking prices (AED 1,351 per sq.ft.) and increasing buyer demand continue to facilitate impressive investment returns. This trend has been consistent over the past decade, with Dubai’s real estate market gaining global recognition as a top-performing investment destination.

Let’s compare Dubai’s property market with another popular investment location, Lisbon in Portugal. 

  • Dubai’s rental yields significantly outperform Lisbon, offering a yield of 7-8% compared to Lisbon’s 5.65%.
  • Lisbon averages €6,009 per square metre, considerably more expensive than Dubai’s €3,916.47 per square metre.
  • Even Portugal’s surrounding areas, which don’t have the same pull as the city centre, average €4,061 per square metre.

Portugal remains a strong investment location, with its property market experiencing steady growth. However, expensive construction costs continue to hinder new developments, slowing down the market’s potential.

In contrast, Dubai’s real estate boom is unmatched in speed and momentum, with 10,000 units added in just the first quarter of 2024 and another 25,000 units expected throughout the year.

WHAT DO PORTUGUESE INVESTORS NEED TO KNOW ABOUT DUBAI PROPERTY?

Dubai’s property market is in a favourable position. With a diverse property market containing off-plan and ready properties and a wide range of budget-friendly and luxurious options, Dubai offers something for all budgets.

Portuguese property investors stand to gain significant profits in Dubai. While market fluctuations will always exist, it’s important to note that Dubai’s market is dynamic and constantly evolving. The rapid development and rising property prices indicate a growing market ripe for investment opportunities.

In 2024, experts predict continued growth for Dubai’s property market. In fact, recent growth has exceeded expectations, with property prices increasing by 5.23% quarter-over-quarter and 20.07% year-on-year.

So, what has Dubai done to maintain this stability? Let’s break it down:

  • Government Initiatives: Reduced transaction fees, increased residency visas, and incentives for long-term investors have all helped to stabilise the market. These policies have contributed to a 27% increase in sales, reaching $9.6 billion in 2023​.
  • Economic Diversification: More emphasis on tourism, technology, and logistics ensures oil isn’t Dubai’s only source of income. As a result, its GDP grew 3.3% in the first nine months of 2023 and is projected to grow by 4% in 2024​.
  • Controlled Supply: Monitoring new developments to prevent oversupply, with around 24,000 new units expected in 2024 to balance demand and supply​.
  • Luxury Market Demand: The high demand for luxury properties from global high-net-worth individuals helps maintain stability. In 2024, Dubai’s luxury segment saw a 267.5% increase in land transactions​.
  • Infrastructure Investments: Ongoing infrastructure developments indirectly support the real estate market. Tourist arrivals increased by 19.9%, reaching 15.4 million in 2023​.
  • Market Resilience: Currently 72.1% above Dubai’s market low of April 2009.

Unlike some other UAE countries, Dubai’s real estate market has matured due to property regulations, improved transparency and a stronger economy. This has made it more resilient during uncertain times.

AN INTERNATIONAL HUB FOR REAL ESTATE INVESTMENTS

Dubai has opened its arms to foreign investors, putting behind old regulations for foreign property ownership. As a result, Portuguese investors can enjoy the following:

  • Full Ownership: Non-UAE nationals can now fully own properties in designated areas.
  • Streamlined Processes: Simplified procedures and reduced bureaucracy for obtaining visas and residency permits.
  • Tax Advantages: Tax-free rental income, capital gains tax exemptions, and no restrictions on repatriation of funds.
  • Diverse Property Types: A wide range of property types, including luxurious villas, renovated apartments, and traditional dwellings.
  • Attracting FDI: In 2023, Dubai topped the MENA region and secured the 12th global position for attracting foreign direct investment.
  • Expats’ Choice: It remained the second-best city globally for expats in 2022.
  • Remote Work: Recognised as the best city worldwide for remote workers in 2023. 

A SAFE AND SECURE INVESTMENT DESTINATION AND THRIVING TOURISM INDUSTRY

Dubai has established a new identity as a safe and secure investment destination. According to New World Wealth, Dubai is the 20th richest city in the world and contributes approximately 30% of the UAE’s GDP. This is a testament to the city’s economic stability, enhancing buyer confidence and making it an ideal place for property investments.

Additionally, Dubai is a tourist-friendly city that goes out of its way to accommodate visitors. Over the last ten years, it has constructed world-renowned attractions such as the Burj Khalifa, the world’s tallest building, the choreographed displays of the Dubai Fountain, and the man-made Palm Jumeirah island. These landmarks, along with cultural sites like the Dubai Creek and the Al Fahidi Historical Neighbourhood, have paved the way for a booming tourism industry.

The city also hasn’t slacked off on its infrastructure. The Dubai Metro and the expansion of its international airport ensure smooth connectivity with the rest of the world.

ECONOMIC AND INVESTMENT TIES BETWEEN PORTUGAL AND DUBAI

In 2022, the UAE exported $26.3 million to Portugal, with the main products being gas turbines, ethylene polymers, and propylene polymers. Portugal, meanwhile, exported $237 million to the UAE, primarily furniture, packaged medicaments, and cars.

Annual exportation rates between the two nations have increased dramatically, with Portuguese exports to the UAE growing by 74.5% and Emirati exports to Portugal increasing by 96.3%. This upward trajectory translates to an increase in opportunities for businesses and investors from both countries.

Furthermore, The Dubai Chamber of Commerce and Industry has been actively promoting business opportunities in Portugal, highlighting the country’s strategic location as a gateway to accessing European markets. Events like the “Roadshow Dubai/Portugal” have emphasised Portugal’s advantages, especially its position as a gateway to European markets. As a result, more Emirati companies are setting up operations in Portugal.

WHERE ARE THE PORTUGUESE AND OTHER INVESTORS BUYING DUBAI PROPERTY?

Foreign investors have observed that the apartment and villa segments bring in the highest rental yields. In 2023, year-on-year ROI data showed that the yield for apartments was 36.1%, while villa returns were at 38.5%. This significant return on investment has made these segments particularly attractive to investors.

Apartment investors should look into areas such as Dubai Marina, Downtown Dubai, and Business Bay due to their high sales transactions, which offer strong investment potential. These areas have recorded a 38% increase in sales transactions, making them attractive for those seeking a second source of income.

Similarly, villa properties in Dubai Hills Estate, Palm Jumeirah, and Arabian Ranches are highly sought after for their luxurious settings and spacious living environments, with these areas recording a 20.72% sales increase. 

COMPARISON OF LUXURY REAL ESTATE MARKETS: DUBAI VS. PORTUGAL

Growth in Property Prices:

  • Dubai: The market for $10 million-plus homes increased 26.3% over the last 12 months, showing rapid growth in the luxury real estate market.
  • Portugal: In 2023, luxury home prices rose in the key regions of the Algarve by 12.3%, Porto by 5%, and Lisbon by 2.2%, reflecting a more moderate growth trend.

Sales and Demand:

  • Dubai: Recorded 105 sales of $10 million-plus homes in the first quarter of 2024, marking a 19% increase from last year. The total value of luxury homes sold in the first quarter was $1.73 billion, a 6% increase from 2023.
  • Portugal: Ranked 9th among preferred countries for buying luxury homes in 2024 with a 3.8% probability for international investors. By 2028, Portugal expects to attract 1,000 high-net-worth investors, representing a 25% growth from last year.

Dubai’s greater growth in both sales and demand over Portugal’s shows potentially higher investment returns in this property segment.

Affordability and Supply:

  • Dubai: The market offers excellent value with $1 million securing 980 sq.ft. of prime residential space, making it one of the best value propositions globally for luxury real estate. Furthermore, the supply of $10 million-plus homes has decreased by 59% to just 864 homes, making these properties more exclusive than ever.
  • Portugal: Despite high housing costs, wealthy foreign investor demand is expected to rise in popular areas regions such as the Algarve, Lisbon, and Cascais.

Dubai’s significant reduction in the supply of $10 million-plus homes indicates rapid demand. This scarcity can lead to property values increasing overtime, potentially increasing investment appreciation.

Popular Regions and Buyer Trends:

  • Dubai: Key areas include Palm Jumeirah, Jumeirah Bay Island, and Dubai Hills Estate. Dubai Hills Estate saw an 11% price rise over the last 12 months, with a 75% reduction in available homes.
  • Portugal: The Algarve is highly sought after by English, Irish, and northern European buyers, while Lisbon and Cascais attract American and Brazilian investors.

Market Outlook:

  • Dubai: Predicted a 5% increase in the prime market this year, with an overall market growth of 3.5%. Dubai’s global connectivity, favourable interest rates, and policies, like the Golden Residency Visa program are expected to attract more foreign investors.
  • Portugal: By 2028, the number of high-net-worth investors is expected to grow by 25%, driven by strong demand in luxury regions despite high costs.

To summarise, both Dubai and Portugal’s luxury property sectors are seen as hotspots for wealthy foreign investors. However, Dubai’s unprecedented price growth, high sales volume, and global affordability make it the fastest, growing prime residential market world-wide. Couple this with investor-friendly policies (i.e., no capital gains tax), and it’s no surprise Dubai has become the go-to choice for foreign investors.

PORTUGAL AND DUBAI'S TAX LAWS FOR PROPERTY INVESTORS COMPARISON

One major pull factor for Portuguese investors is Dubai’s highly desirable tax system. Dubai has a very business-friendly tax regime, and this is seen as a major advantage for foreign property investors. Dubai offers significant tax advantages, with no capital gains tax, income tax, tax on investment income, or inheritance tax. In contrast, Portugal imposes taxes on capital gains, personal income, investment income, and inheritance, as well as a corporate tax rate.

Dubai’s hassle-free tax system advantageously positions foreign investors and makes it a tax haven for businesses. It also simplifies the process for property investors or anyone willing to set up their business in Dubai. In contrast, Portugal, while offering some tax benefits, imposes various taxes such as stamp duty and capital gains tax on property and investments. This makes Dubai’s more streamlined tax system a significant advantage for those looking to invest or do business in the city. 

GET MORE
INFORMATION

Download the brochure

Top Locations
for Portuguese Investors

Popular Projects
for Portuguese Investors

  • All Post
  • Ajmal Makan
  • Al Habtoor Group
  • Aldar
  • AQUA Properties
  • Arada
  • Avenew
  • Ays Developments
  • Azizi Developments
  • Binghatti
  • Citi Developers
  • Condor Developers
  • DAMAC Properties
  • Danube Properties
  • DarGlobal
  • Deca Properties
  • Dubai Properties
  • Dubai South Properties
  • DURAR Group
  • Ellington Properties
  • Emaar Properties
  • Empire Developments
  • ESNAAD
  • Expo City Dubai
  • Guides
  • Iman Developers
  • Imtiaz Developments
  • Insights
  • LEOS Developments
  • LIV Development
  • London Gate
  • MAG
  • Meraas
  • Meraki Developers
  • Nakheel Properties
  • National Properties
  • News
  • Nshama
  • Object 1
  • Octa Properties
  • Omniyat
  • ORO24
  • Peak Summit Developments
  • Prestige One
  • Samana Developers
  • Select Group
  • Sobha Realty
  • Tiger Properties
Art Bay

Ellington Properties
Al Jaddaf
Starting price - from AED 1,700,000 | GBP 366,063
The Waterway

Prestige One
Meydan
Starting price - from AED 1,200,000 | GBP 257,640
The Acres

Meraas
Dubailand
Starting price - from AED 5,900,000 | GBP 1,280,890

Read More on Dubai's
Leading Developers

SPEAK TO AN
INVESTMENT
CONSULTANT

With offices in London and Dubai, we’ll help you to explore the best current opportunities in Dubai, as well as get access to live availability and pricing.

×





DOWNLOAD
THE BROCHURE

Enter your details below to get your copy.

By submitting this form you agree to subscribe to updates from M&M Real Estate and be sent information in relation to its products and services.