Dubai’s residential property market has attracted private investors over the last twenty years despite global economic crises. The city’s real estate sector currently seems to be recovering from the COVID-19 pandemic, and numerous luxury residential projects, such as the Urban Oasis by Missoni located in Business Bay, offer excellent opportunities for potentially lucrative investments.
In this article, we shall look at why private property in the United Arab Emirates is in high demand among foreign buyers and how the government’s recent attempts to open the country have increased the flow of foreign direct investments to the country’s real estate sector.
Changes in Legislation and Foreign Direct Investments
The government’s recent attempts to overcome the negative impact of the COVID-19 pandemic on the country’s real estate sector seem to have worked well so far. In particular, it has become noticeably easier for foreigners to obtain residence permits and establish and run a business in the country.
Such measures have revitalised the UAE’s foreign affairs. That, in turn, has had a positive effect on the private property market, especially in Dubai, attracting many celebrities, from Europe in particular, who come to Dubai to spend their holidays there and decide to make that lively and cosmopolitan city their second home.
As a foreign investor, you are no longer required to seek a local sponsor, and you are also entitled to 100% proprietorship. Besides, you do not have to pay taxes when you reside outside the country. You will only have to pay the 5% VAT applicable to the commercial property if you choose to let it out.
As a result, the number of foreign purchases of the local estate has exceeded 20,000 in 2021, reaching the highest volume since 2014. The presence of foreigners in the city’s luxury property market has almost doubled compared to last year and has come to its maximum of all times.
Private Property and Residence Permits
You can also apply for a real estate investor visa if you purchase property for at least one million AED and repay at least half of your mortgage loan. The precise value of your purchased property will determine the type of visa you can obtain with it.
For example, purchasing private property for five million AED will entitle you to a five-year residence permit. And if you invest 10 million AED in a maximum of three residential entities, you will automatically receive a ten-year residence permit.
Plus, if you are 55 years or older, you can apply for a retirement visa, provided you:
- Have invested at least two million AED in private property
- Have a minimum of one million AED in your bank account
- Can prove an active monthly income of AED20,000
Mortgage Loans in Dubai
Besides, the mortgage rates have become significantly more accessible and reasonable for local and foreign applicants alike. You can borrow up to 60% of the total property value, depending on the financial institution. And the maximum loan increases to 80% if you reside in the Emirates.
It is also possible to receive a mortgage loan before choosing a property, which allows you to explore the market knowing exactly how much money you have for the purchase.
As a result, the total amount of mortgage loans has risen by 77% since last year, and the number of mortgage transactions has reached the highest level of the previous five years.
Advantages of Purchasing Private Property in Dubai
Several factors seem to account for the increasing foreign direct investments in its luxury residential market.
- The government has recently granted foreign investors some additional and impressive liberties in the real estate sector, such as 100% ownership over the purchased property.
- The private property market in Dubai offers lucrative rental interest rates.
- There is no income tax on rental yields and capital appreciation.
- Domestic financial resources, including mortgage loans, are easily accessible.
- Private property purchase entitles the owner to permanent residence in the UAE.
- Dubai’s residential property market compares favourably with the other large cities in the world in terms of its nominal and profit values.
- The UAE maintains a high standard of living in terms of the macroeconomic and human development variables, such as the gross domestic product, average disposable income, crime rate, medical system, level of education, and others, which is especially true for Dubai.
Summary and Conclusion
Dubai is a beautiful and wealthy city that offers its residents and visitors plenty of things to do and places to see, good quality of living, excellent opportunities for lucrative investments in its real estate sector, and a healthy lifestyle for potential retirement there. Besides, local estate agencies provide numerous types of private property to invest in, including the off-plan property even in Business Bay.
For these reasons, the luxury residential market will probably continue to flourish and prosper, increasing the private property prices in the meantime, and it now might be a good time to invest in Dubai’s real estate sector while it is still recovering from the pandemic.