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July 19, 2024
PI Global Investments
Real Estate

Investment for Foreigners in UAE Real Estate

Real estate has long been a popular, stable investment. Investors acquire an asset, hoping that its value will appreciate with time and earn them returns. 

The global market presents exciting prospects for investors, and few options show as much promise as the UAE’s real estate.

Thanks to the freehold decree passed in 2002, the UAE has emerged as an attractive destination for foreign real estate investors. The law allowed foreign nationals to own real estate outright in designated free zones in the UAE instead of having to sign a time-bound lease. This has contributed to a boom in property development and interest from overseas buyers. 

Today, the UAE’s freehold zones are hotbeds of foreign investment, with real estate in Dubai being a prime example. The UK, China, India, Italy, France, Canada, Egypt, and Lebanon are leading the rush of foreign real estate investors in the UAE.

The Role of Local Investors vs Overseas Investors

The UAE has a unique geographical advantage, located at the crossroads between Asia, Africa, and Europe. Along with its strategic placement, its business-friendly, low-tax environment has made it a promising destination for local and international investors. 

Over the last two decades, real estate in the UAE has steadily risen in value. A CBRE report found that average prices for residential real estate in Dubai had grown by 15.9% in May 2023 compared to May 2022. The number of transactions had also increased by 76.6% compared to the previous year.

This growth is driven by local and overseas investors. The key difference between the two is that foreign investors can only purchase real estate in the UAE’s freehold zones, which are located in the cities of Dubai and Abu Dhabi. Meanwhile, local investors can buy real estate anywhere in the UAE. 

The high ROI of most UAE real estate attracts millions of dollars of foreign direct investment (FDI) each year, and the market’s value is expected to reach $0.69 trillion by the end of 2023.

Popular Sectors for Foreign Investors

Of all the cities in the UAE, Dubai is undoubtedly the most attractive city for foreign investors. There are more than 50 freehold zones, offering a plethora of options to property buyers. Apartments, townhouses, villas, and commercial properties — a foreign investor can own them all in Dubai. 

With the 11th-highest rental yield of any city in the world, property in Dubai is a very promising place to spend capital.

Dubai is very popular with foreign investors because after paying the initial transfer tax and registration fee (which is split between buyer and seller), they don’t need to pay any annual property taxes. 

Purchasing property also has the added benefit of making the investor eligible for UAE’s residency program. Called the Golden Visa, it allows foreigners who buy real estate to obtain residency for up to ten years, depending on the value of their investment.

Popular Locations

Dubai is a truly global city, with a large population of expats from all around the world living and working there. With the increase in foreign investments in the city’s real estate, many locations have emerged as highly desirable for investors:

This location demonstrates Dubai in all its glory, with iconic structures like the Burj Khalifa and Dubai Mall dominating the skyline. There’s a massive demand for commercial and residential real estate in this location, which is attractive to local and foreign investors.

Those who want a taste of the glitzy lifestyle that Dubai is famous for should consider Dubai Marina. This waterfront location brushes against the shore of the Arabian Sea, with a backdrop of luxury apartments, artful skyscrapers, and palatial villas.

If you are considering living in the UAE, Jumeirah Village Circle (JVC) in Dubai is a promising location. It is a thoughtfully landscaped residential community that is still growing — a popular destination for affordable real estate that will increase in value over time.

One of the most exclusive locations in the world, not just the UAE, Palm Jumeirah represents the epitome of luxury. This beachside location is where you can find the most high-end residential properties in Dubai.

Popular Developers

Dozens of major developers are engaged in real estate projects across the UAE. Some of the industry leaders are:

  • Aldar Properties 
  • Emaar
  • Deyaar Properties
  • Nakheel PJSC
  • DAMAC Properties

Real Estate in Dubai for Investment. Photo via Pexels by Ayrat

Factors to Consider When Investing in the UAE

Investing in foreign real estate is not a decision to take lightly. As a foreign national, you need to know about the advantages and drawbacks before you decide to buy property. 

For instance, if you are seeking a residence permit, a property worth over $204,000 will get you a two-year permit. Real estate worth over $545,000 will get you a 10-year permit. 

The Real Estate Regulatory Agency (RERA) sets the frameworks that govern UAE real estate. The UAE actively courts foreign investments and has always respected the property rights of foreigners in its freehold zones. Your rights as a property owner will be upheld regardless of whether you own it for residential or business purposes. 

In Summary

The UAE’s real estate is a growing market, and Dubai is a primary center of investment. Purchasing real estate in the UAE makes you eligible for a residence permit. You simply need to follow RERA guidelines when investing or buying property. The high demand for real estate in the UAE promises high returns for investors.

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