How to make money investing in real estate in the UAE?

Why should you purchase real estate in the United Arab Emirates? There are some common reasons for most investors. For example, there are no taxes on ownership, sale, or rent in the country. Moreover, income from the resale and rental of real estate is higher than in many of the world’s key housing markets.

State authorities are doing everything to attract foreign capital. Since September 2021, any investor who has bought real estate in Dubai for at least AED 750,000 ($204,000) can apply for a 3-year resident visa. This visa can be extended several times while the applicant remains the homeowner. Let’s take Dubai as an example of the UAE real estate investment market for a more detailed look.

Prospects of the UAE real estate investment market

There are 7 emirates in the country, the largest being Abu Dhabi and the capital of the state. However, Dubai is more popular not only with travellers but also investors. In 2021, housing for over AED 300 billion ($81,6 billion) was sold here. In total, other emirates have not sold even half of this amount.

Ian Goldin, Professor of Globalization and Development at Oxford University, says that the emirate’s market has recovered to pre-pandemic levels. Therefore, the influx of foreigners to Dubai will only grow. This will increase the demand for real estate and improve the profitability of rental housing. Investment in housing for resale is equally promising if you purchase apartments during the off-plan construction stage. This cost is almost 30% cheaper than constructed housing. In October 2021 alone, Dubai’s average property price increase was 19.94%. Experts believe that the cost of a square meter will continue to increase in 2022, allowing those who resell their property to profit.

Beautiful downtown

Investing in the Dubai market

Most investors in the UAE are focused on Dubai. The local market is much more active than any other in the country. EXPO-2020 has attracted many foreign investors. It is projected that by March 2022, more than 25 million people will have visited the exhibition. This includes not only guests but also participants. Everyone needs a place to stay, which helps the owners of local real estate to earn money by renting out housing.

According to preliminary data for the last quarter of 2021, the capital growth of off-plan real estate investments in Dubai is 30% with a return of 5%. These figures are higher than in many major cities in Europe.

As experts predict, the market rush will not decrease after the exhibition. This event is organized to attract customers and Dubai will become more attractive to more people when the EXPO-2020 ends.

How to choose a profitable property

To choose a profitable property, one has to understand the level of demand and reasons for this of various types of real estate for clients. Today, buyers and tenants in the UAE aspire to live comfortably, even luxuriously. This change in many people’s priorities is one of the consequences of the pandemic. Therefore, it is impossible to earn a lot on the most economical real estate in the UAE. Minimum prices for investors are AED 360,000 ($100,000). You can find a cheaper property but it may be impossible to gain an adequate income from it or even immediately after registration. However, Dubai has a wide range of properties that can be purchased profitably as investments.

In which areas of the city can you buy a property with full ownership? Foreigners can purchase real estate in freehold zones in the following neighborhoods in Dubai:

  1. Dubai Marina;
  2. Emirates Living District;
  3. Several other legal zones.

Where can real estate be leased for long periods (leasehold)?

Leasehold is a form of ownership in which a property is transferred to temporary ownership with the right to dispose of property at its discretion. This option may be called a long-term lease, but unlike the standard contract, ownership of the housing can last for 99 years.

These areas are:

  1. Burj Dubai;
  2. Jumeirah District and so on.

In some quarters of Dubai, there are freehold and leasehold forms of ownership with the right to buy and lease real estate for 99 years.


Long-term rental

Long-term rental of real estate can bring up to 8% profit per year. This figure is typical for prestigious areas like Palm Jumeirah, Dubai Marina, and Business Bay. In other communities, profitability can reach 4 to 7%. A lot depends on the type of housing. 1-bedroom apartments have the highest income. Villas and mansions can bring in less – up to 5% profit. To rent a house, you must sign and register an official lease agreement.

A real estate company will draw up an agreement based on the owner’s passport. The money will be credited to the owner’s account. To do this, the owner does not need to be in the United Arab Emirates.

Short-term rental

Renting a house for a short period is more profitable for an investor as it will allow you to reach the maximum yield of up to 11-13% per year. For comparison, when renting the same property for a long time, an investor receives 7-8% per annum.

In Dubai, there are companies specializing in the management and maintenance of properties, as well as in the search and interaction with tenants. Companies take payment for their work – about 20% of the lessee’s funds. This amount includes these tasks, as well as inspection, receiving and cleaning of premises before and after the departure of tenants.

Management companies, as a rule, prefer to work with long-term leases. For example, for 1-room apartments in Dubai Marina, you can get an average of AED 110,000 ($30,000) per year for long-term rentals.

If you rent them daily or weekly, the payment will be at least AED 367 ($100) per day. According to statistics, the occupancy rate of these apartments for short-term rentals is maintained at 75-78%.


We will help you buy real estate in Dubai

Ax Capital helps investors choose and purchase real estate in Dubai. Representatives of the company have extensive experience in the emirate’s real estate market. Start choosing a property right away. Call our staff on the phone number listed on our website for assistance with any requests or answers to any questions you may have.