UK investors set to flock to Dubai in 2023

Dubai property has been and will continue to be one of the most popular and performative investments for UK investors.

Since Dubai opened its doors to overseas investment two decades ago, UK investors have found it to offer some of the strongest returns available anywhere in the world.

Now, as the UK is expected to hit a period of economic uncertainty, the pull of Dubai property and the emirate’s booming economy are more enticing than ever before.

Dubai is one of the strongest-performing property markets in the world

The UK economy is struggling. Growth prospects post Brexit and covid lag behind other countries. In February 2023, after the UK narrowly avoided an official recession, the Chancellor warned economic forecasts remain grim.

Even if the UK, wasn’t set to experience a gloomy and stagnating property market and high-interest rates, many investors would be looking at the Dubai property market and thinking the future of their money looks brighter if it was invested in Dubai.

The UK to Dubai investment highlights

  • Top 5 global capital growth performance
  • Average yields of 5-7%
  • More sustained property performance outlook
  • Strong and diversified economy
  • More relaxed and welcoming Visa process
  • Less expensive per sq ft than London
  • 2nd safest city in the world
  • World’s top destination for Foreign Direct Investment projects

What do UK investors need to know about Dubai property?

Dubai property is changing.

Previously investors knew they were speculating in a boom-bust cycle. And that was compelling for many Brits. Back in Gold Rush years following the opening up of the Dubai property market for Foreign investors, a time in which some of the biggest capital appreciation spikes of all time were recorded, Brits were the third largest cohort of investors – behind only Emirates and Indians.

However, investors now find a very different property market, one that resembles London 20 years ago.

Last year saw the emirate record double-digit capital gains increases, a growth rate that was twice the global prime average.

This was following a record-breaking 2021, in which the Dubai market saw industry sales transactions totalling AED 151 billion (USD 41 billion). Not only was this huge demand 110% more than the previous 12-month period, it was also much higher than even pre-pandemic investment levels – recording a 90% and 55% rise in value and volume respectively.

As for yields, Dubai property is currently offering a very strong rental yield, certainly compared to other investments or even UK prime property.

Investors in London property struggle to get a 3% annual rental return on investment, in Dubai investors are recording 7% fairly easily.

Where are people investing in Dubai property?

Here is a general breakdown of where investors are acquiring real estate in Dubai currently

  • Business Bay acquisitions represent around 15% of the market. The average property price is AED 1.2 million
  • Downtown Dubai acquisitions represent around 8% of the market. The average property price is AED 700,000
  • Jumeirah Village Circle acquisitions represent around 8% of the market. The average property price is AED 1.1 million
  • Dubai Marina acquisitions represent around 6% of the market. The average property price is AED 1.5 million
  • Dubai Creek Harbour acquisitions represent around 5% of the market. The average property price is AED 2 million
  • Arjan acquisitions represent around 4% of the market. The average property price is AED 700,000
  • Dubai Hills acquisitions represent around 4% of the market. The average property price is AED 2 million
  • Palm Jumeirah acquisitions represent around 4% of the market. The average property price is AED 3.3 million
  • Jumeirah Lakes Towers acquisitions represent around 3% of the market. The average property price is AED 1 million
  • Al Furjan acquisitions represent around 3% of the market. The average property price is AED 900,000

 

Generally, the more expensive districts tend to be villa or townhouse-centred regions, with apartment-dominated districts much more reasonably priced, particularly for first-time investors looking for a higher ROI.

More maturity, more long-term performance

As mentioned, the Dubai authorities have done much in recent times to bring more sustainability and transparency to the property market and it has had an impact on long-term investor sentiment.

The emirate is now viewed as the most transparent property market in the MENA region, a fact recognised by many global consultancies.

Investors now benefit from new and revised policies and regulations from the UAE government, including the Dubai Land Department’s decision to ensure all real estate data is now publicly available.

The wider economic considerations of UK investment in Dubai real estate

UK investors are no doubt familiar with Britain’s economic struggles, struggles that have already hit the mortgage market and are now only just beginning to impact the housing market.

However, the economic performance of Dubai has yet to make headline news. What has made Dubai’s fiscal rise more startling is that it is not solely reliant and the rise in the wholesale cost of oil over the past financial year following the conflict in Ukraine.

Dubai’s economic surge

  • Huge diversification in GDP from Vision 2021 and Industrial Strategy 2030 masterplans
  • Record-breaking influx of high-net-worth individuals post covid
  • Large net migration of skilled workers and subsequent job creation following new visa regulations.

The 6 National Priorities set out in the UAE’s Vision 2021, including world-class education and healthcare systems, are now starting to bear fruit, while the wider benefits of the Industrial Strategy 2030 are beginning to be realised – Etihad Rail, is underway and will carry 36 million people to 11 cities across the UAE’s seven emirates, for instance.

Consequently, at the start of 2023, the World Bank upwardly revised the UAE’s growth forecast for 2022 and 2023 by 1.2% and 0.7%, respectively, meaning growth of 5.9% in 2022 and 4.1% is expected to be recorded. Again it was the expansion of the non-oil sector that was seen as the major driver.

It means that Dubai and the UAE is the fastest-growing economy in the Gulf Cooperation Council. Of course, the upward revision came at a time in which the global economy is projected to slow down sharply due to high inflation, rising interest rates and reduced investment activity elsewhere.

The world's favourite diversification and investment hotspot

Despite many property investors failing to realise the potential of Dubai’s wider economic performance as yet, governments and institutions are well aware of it.

In the final quarter of 2022, it was announced that Dubai had retained its position as the world’s top destination for foreign direct investment (FDI) projects.

The UK (36%), the US (20%), France (10%), Singapore (5%), and Switzerland (4%) were the top source countries for FDI capital in Dubai during the time of the report.

Hamdan bin Mohammed said: “Dubai’s record FDI inflows and top rankings testify to investor confidence in its stability and reinforce its status as a strategic partner to foreign investors

“We remain committed to enriching Dubai’s enabling business environment to explore fresh growth avenues with our partner investors to achieve even greater success in years to come”

“In a world facing profound challenges over the past few years, Dubai offers one of the safest and most stable business environments, boosting investor appetite.”

The numbers are certainly confidence-boosting. Dubai attracted a record 492 FDI projects in the first half of 2022, which represented a huge 80% year-on-year rise.

Tax benefits of Dubai property investment

Dubai remains notable for its very favourable taxation rules.

This approach has helped investors maximise the return of any property investment they make in the emirate.

Of course, tax status, implications and advice are best discussed at an individual level, and that is something we can help all our investors navigate should they choose to acquire property with our aid.

Visa opportunities for UK investors buying Dubai property

One final pull factor that Dubai is offering UK investors is residency.

Always seen as a great place to live, Dubai’s real estate landscape has greatly benefitted from sweeping government reforms that link residency to investment in a much more advantageous and simple manner.

A new amendment allows investors to obtain a ‘Golden Residence’ visa after purchasing one or more off-plan properties of no less than US $544,500 (AED 2 million) – provided the transaction is overseen by an approved local real estate company.

The visa – officially known as the Golden Residence Scheme – is a long-term visa that enables people to stay as residents of Dubai for 10 years.

Furthermore, in other progressive visa changes, the Dubai authorities have responded to the rise in remote working across the world with the so-called digital nomad visa.

Holders can live in the emirate while working for an overseas employer without any income tax payable there. It’s a bid to entice skilled, young foreign professionals and boost Dubai’s emergent technology sector. It’s also highly beneficial for property owners with apartment assets to let.

This article uses information from sources including Bloomberg, Government of Dubai Media Office, Rightmove, Forth Capital, The Lowestoft Journal, Zawya and Khaleej Times.

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