UAE Real Estate Investments in 2024

The UAE real estate market continues to grow at a record pace, and the last 12 months have shown that demand, prices and rental rates in all housing segments are not going to fall. The trend is gradually beginning to cover not only the traditionally popular Dubai, but also other emirates: Abu Dhabi and Ras al Khaimah.

What is behind the record growth, what factors contribute to the development of the Emirati markets and what options are available to investors in UAE real estate?

The content of the article

1. Investment options in the UAE
   1. Investing in real estate
   2. Investing in a ready-made business
   3. Investing in starting a business
   4. Investing in savings accounts
   5. Investing in the stock market
   6. Investing in investment fund units
2. Investments in Dubai
   1. Dubai Real Estate Market: analytics
   2. Types of real estate for investment
   3. Return on investment in facilities under construction
   4. The best areas of Dubai for real estate investment
3. Investments in Abu Dhabi
   1. Real estate prices in Abu Dhabi
   2. Property registration tax
   3. The right to own real estate for foreigners
   4. The best areas of Abu Dhabi for real estate investment
4. Investments in Ras Al Khaimah
   1. The advantages of investing in Ras al Khaimah
   2. The best areas of Ras Al Khaimah for real estate investments
5. Investments in Ajman
   1. The advantages of investing in Ajman
   2. The best projects and districts in Ajman

Investment options in the UAE

Sound macroeconomic policy continues to strengthen the UAE’s position as an international investment hub, and in 2024, the Emirates’ policy of diversifying the economy and developing the investment environment is bearing fruit.

Business chooses the UAE

Dubai and Abu Dhabi occupy the third and fourth places in the ranking of the best cities to work according to the Boston Consulting Group, second only to London and Amsterdam, and the UAE has been recognized as the number one country for business creation for the third year in a row, according to the GEM 2023/2024 report.

A recent study noted an improvement in 11 out of 13 indicators of conditions for the development of entrepreneurship compared to 2022. The largest growth was demonstrated by the indicators of transfers for mining, as well as for the development of commercial and professional infrastructure — each rose from 6.8 to 7.8 points.

Against this background, businesses continue to choose the UAE for their activities, despite the introduction of corporate tax in Dubai from June 2023. The number of new companies in the Dubai Chamber of Commerce increased to 67,222 in 2023 (+26.8% by 2022) and to 19,056 in the first quarter of 2024 (+17.6% by the first quarter of 2023).

The introduction of a Single Economic Business License in Abu Dhabi will attract even more companies to the region, which will also increase the demand for Class A offices.

The volume of foreign direct investment is breaking records

According to the World Investment Report 2024, published by the United Nations Conference on Trade and Development (UNCTAD), the volume of foreign direct investment (FDI) received in the UAE in 2023 amounted to 30.68 billion dollars. This is 28% more than in 2022, when it was $22.73 billion.

By comparison, the United States attracted the largest volume of FDI, but its total investment decreased by 3% compared to the previous year.

Migration of large capital to the UAE

According to the Henley & Partners report, the expected inflow of HNWI in The UAE will have 6,700 dollar millionaires in 2024. The largest outflow of capital is observed from China and the UK. Factors provoking migration include the prospect of higher taxes under the new Labour government in the UK.

Dubai, in turn, attracts wealthy investors with a safe business environment and visa reforms that encourage migration.

All these factors clearly demonstrate the maturity of the UAE market as a favorable field for investment: over the past few years, the Emirates has created a solid foundation for long-term investments, offering investors a range of opportunities to preserve and increase capital.

Investing in real estate

Since residential real estate became available for purchase to foreigners in 2002, the situation in the Emirati market has changed dramatically.

Today, the UAE is a stable environment for investments in foreign real estate, where the speculative nature is gradually giving way to maturity and competent calculation, and situational market players are replaced by investors with experience and a request for qualitatively new projects.

Global Investment Hub

According to Knight Frank, 73% of large private investors (HNWI) from around the world consider Dubai as a priority city for buying real estate. Residents of East Asia (China, Hong Kong, Singapore) show the greatest interest in acquiring development projects in Dubai (77%).

This figure is slightly lower among HNWIs from the Persian Gulf countries (57%) — the remaining 43% tend to invest in home markets (Saudi Arabia, Qatar and Oman).

The best conditions in global markets

39% of global HNWIs associate the purchase of real estate in the UAE with the investment attractiveness of projects, 26% see the high tourism potential of the Emirates, 15% appreciate the quality of life and services.

Investors cite low taxes as important factors (there is no personal income tax, and corporate tax is lower than in alternative markets), a comfortable business environment and a transparent and understandable “golden visa” program.

Keeping up with global trends

The growth of the UAE real estate market coincides with the main vectors of global demand development:

• Amid global economic uncertainty, investors are looking for stable markets to invest in;
• The COVID-19 pandemic has changed investor preferences, increasing interest in real estate properties that offer the opportunity to work and relax in one place;
• Dubai is actively investing in the development of digital infrastructure and innovative technologies, which corresponds to the global trend for digitalization and technological development;
• The trend towards sustainable development is presented in The UAE has high standards of healthcare, education and personal safety.

Investing in real estate in the UAE is profitable

Average net return on real estate in the UAE

Sources: C&W, Bayut, Reidin

Investing in a ready-made business

The UAE continues to actively stimulate investment and entrepreneurship: investors are given the opportunity to own 100% of companies, and initiatives like NextGenFDI accelerate the licensing and registration process for technology companies seeking to gain a foothold in Emirates.

Buying an operating company or a stake in it is an effective way to obtain a resident visa in the UAE, bypassing the stages of creating a new business. It is important to remember that a company that a foreign investor plans to acquire must meet the same criteria as a new business.

Before buying a business, it is necessary to conduct a thorough audit: analysis of financial statements, legal status, existing contracts, obligations and compliance with local regulations. At this stage, the investor agrees on the terms of the transaction and draws up a purchase and sale agreement (SPA), which specifies the price, payment structure and any conditions that must be fulfilled before completing the transaction.

In order to legally formalize the transfer of ownership rights to a business, it is necessary to obtain written approval from the Licensing Authority of the Investment Division of the UAE Ministry of Economy.

After the transfer of ownership is approved, the business must be re-registered with the Ministry of Economy and the Department of Economic Development (DED) in the emirate where the company operates.

Investing in starting a business

Opening a business in The UAE is regulated by Federal Law No. 19 on Foreign Direct Investment.

For a foreign investor, it is important that the type of business activity falls on the “Positive List” allowing 100% foreign ownership.

The Ministry of Economy identifies several areas that are currently particularly promising for investment:

• fintech;
• agricultural technologies;
• healthcare;
• education;
• tourism;
• logistics;
• Information and communication technologies;
• medical tourism;
• renewable energy;
• Media and entertainment;
• creative industries;
• gambling activity.

The decision of the Ministry of Finance sets minimum capital requirements for companies that are wholly owned by foreign investors, and these requirements vary depending on the type of activity. For example, for agriculture, at least 7.5 million dirhams ($2 million), for production — from 2 million dirhams ($544 thousand), for the service sector — up to 100 million dirhams ($ 27 million).

At the next stage, an application for an FDI license is submitted with the attachment of all required documents, including the company’s articles of association. After obtaining a license, you should open a corporate bank account and deposit at least 20% of the authorized capital into it.

Investing in savings accounts

There is no single fixed rate for savings accounts in the UAE — each bank sets its own conditions. The national average interest rate is slightly more than 1% per annum, depending on the size and duration of the deposit.

Both a resident of the Emirates and a foreigner can open a savings account here. The conditions for opening accounts for residents and non-residents may vary depending on the particular bank.

Interest rates on deposits in UAE banks

Investing in the stock market

Investors, whether residents or non-residents of the UAE, can participate in trading on local stock exchanges through brokers. To do this, you need to obtain an investor identification number and open a trading account with a broker registered on one of the three UAE exchanges:

• Dubai Financial Market;
• Abu Dhabi Securities Exchange;
• NASDAQ Dubai.

Investing in investment fund units

On April 1, 2024, the new regulation of mutual funds came into force. Restrictions on the promotion of investment funds began to apply: the sale of foreign mutual funds is allowed only through private placement for professional investors.

Criteria of a professional investor:

• has net assets of at least 4 million dirhams ($1.09 million);
• He confirmed his status as a professional investor.

Detailed regulations on the regulation of mutual funds can be found on the official website of the Securities Administration.

Investments in Dubai

The positive dynamics of the Dubai real estate market, according to the latest reports of the land Department, shows no signs of cooling, on the contrary, sales volumes are breaking records even in the traditionally low summer season.

Dubai Real Estate Market: analytics

Price per sq. m. The meter in Dubai continues to grow for the 16th consecutive quarter. Year-on-year growth is 21%, and compared to the first quarter of 2020, prices increased by 53%. At the same time, there is a slowdown in the rate of price growth in ultra-expensive areas.

According to Tranio analysts, in August 2024, buyers made 11,131 real estate transactions during the construction phase – 50% more than in August 2023 (7,426 transactions). Compared to July 2024, the number of transactions increased by 6%.

The total value of the off-plan real estate sold in August amounted to $ 7.55 billion, which is 46% more than in August 2023. The indicator increased by another 6.3% compared to last month and set a new record for 4 years of observations.

The most popular projects in the off-plan apartment segment were Marina Views (4.9% of all transactions), Verve City Walk (3.5%) and SOBHA ONE (3%).

There is a positive trend in the secondary real estate market: according to Property Monitor, in July 2024, the share of primary sales decreased by 0.5% and amounted to 59% against 41% of transactions in the secondary market. The average value for 12 months is 61.4% for primary sales and 38.6% for secondary real estate.

The most popular area for initial sales was Dubai Hills Estate, where 10.9% of all off-plan real estate transactions were completed. It is followed by the JVC district with a market share of 9.2%.

Housing supply and commissioning plan

According to a C&W study, record volumes of housing starts show no signs of slowing down. Developers with a large land fund are starting to implement new projects, and private developers are actively acquiring land.

24,300 housing units will be commissioned in the III and IV quarters of 2024. By the end of the year, it is planned to hand over almost 39,000 housing units, which is the same as in 2023. The largest volumes of input were recorded in District 7 MBR City (4,292 units), followed by Business Bay (3,722 units).

The volume of residential apartment launches in the second quarter of 2024 increased by 56% compared to the same period last year. The launch of villa projects, on the contrary, decreased by 17%.

The interest of investors from developed markets (Western Europe) in Dubai, as well as high demand from HNWI, for which prices are perceived acceptably even at record high levels, limit the risk of oversupply.

Rental market

According to the Dubai Land Department, 299,564 lease agreements were registered in the first half of 2024, which is 52.5% more than in 2019 and 5.8% more than in the same period of 2023.

On average, rental rates in the emirate increased by 19% year-on-year and by 64% compared to the first quarter of 2020.

Due to the sharp and prolonged increase in rents for 14 consecutive quarters, there has been an increase in the proportion of tenants who continue to renew contracts by 14%.

The update of the RERA rental index is likely to provoke a shift in demand from the elite segment towards more affordable housing. The increase in rental rates will affect all areas of Dubai: an increase in the cost of even several contracts in a single area will trigger a chain reaction and rates will rise immediately throughout the location, and then throughout the emirate.

Types of real estate for investment

According to Dubai Land Department data for the second quarter of 2024, the total volume of real estate transactions reached 43,261 units — 43.8% more than in the second quarter of 2023.

Dubai real estate market in the second quarter of 2024

Apartments

According to Knight Frank, in the second quarter of 2024, there is a total increase in apartment prices by 6%: the figure was 20.7% higher than in the same period last year. Despite a significant increase of 44% since 2020, current prices exceed the peak of 2014 by only 3.2%.

Villas

As for villas, their value continues to grow faster than the apartment segment. In the second quarter of 2024, the average price of private homes increased by 6.7%, reaching $5,557 per square meter. The meter is an increase of 24.3% compared to the same period last year. Villa prices are now 28% higher than at the peak of 2014.

Tranio experts will select liquid properties in Dubai for living and investment. Leave a request to receive a detailed consultation with an overview of the UAE real estate market.

Submit your application

Offices

According to CBRE, the average office occupancy in the second quarter of 2024 was 91.4%, which is slightly lower than the level of 91.5% a year earlier. The slight decrease in occupancy is largely due to the arrival of new supply on the market.

Rental rates in the office real estate segment continue to show steady growth during the quarter. Average rental rates for the Prime, A, B and C segments increased by 4.7%, 19.9%, 20.9% and 15%, respectively, compared to the previous year. At the end of the second quarter of 2024, average rental rates in the Prime, A, B and C office segments amounted to 750, 580, 483 and 389 dollars per square meter. a meter per year, respectively.

Rental rates in Dubai offices in the second quarter of 2024