Dubai is one of the financial powerhouses of the word. However, only a few decades ago this city was only just transforming from a middle eastern fishing port into the business centre of the world.
So how did they do it? Why did it happen so quickly? And how do you invest in Dubai?
In this article we explore some of the ways you can invest in Dubai, to make sure that you never miss out on the up and coming and profit along the way!
Dubai Real Estate and Returns
The first and most obvious way to invest into any area is to buy property.
The great benefit to buying property in Dubai is that the city is constantly growing in size and popularity. What’s more, with Dubai being a huge holiday destination, you can be sure that your buy to let will have more chance of being let consistently than most other places in the world.
Dubai has pretty much every type of property to invest in, from 1 bedroom apartments in Dubai Marina, to 5 bedroom villas on Palm Jumeirah. The property type and the area will influence your profit returns so make sure to research as much as possible before you dive in!
To give you an idea we have chosen three area’s in Dubai below with the help of Property Finder.
Note: Gross Yield = Average Annual Rental Price Divided by the Average Sales Price.
Average Returns on Property – Dubai Marina
|Dubai Marina Property Type||Average Asking Price||Average Gross Yield|
|1 Bedroom Apartment||1,270,000AED||5.9%|
|2 Bedroom Apartment||1,949,999AED||5.9%|
|3 Bedroom Apartment||3,200,000AED||5.3%|
Average Returns on Property Jumeirah Village Circle
|Jumeirah Village Circle Property Type||Average Asking Price||Average Gross Yield|
|2 Bedroom Villa/Townhouse||2,050,828AED||5.4%|
|3 Bedroom Villa/Townhouse||1,6997,495AED||6.2%|
|4 Bedroom Villa/Townhouse||2,100,000AED||5.7%|
|5 Bedroom Villa/Townhouse||3,200,000AED||6.9%|
|1 Bedroom Apartment||675,000AED||6.4%|
|2 Bedroom Apartment||1,020,429AED||6.3%|
Average Returns on Property Al Barsha
|Al Barsha Property Type||Average Asking Price||Average Gross Yield|
|3 Bedroom Villa/Townhouse||3,500,000AED||3.9%|
|4 Bedroom Villa/Townhouse||4,300,000AED||4.5%|
|5 Bedroom Villa/Townhouse||9,625,000AED||2.6%|
|1 Bedroom Apartment||725,000AED||6.2%|
|2 Bedroom Apartment||1,121,615AED||5.8%|
As you can see from the tables above, a Studio Apartment in Al Barsha can be picked up relatively cheap compared to most other areas and returns the best gross yield.
However, it’s not as simple as just choosing the property with the lowest asking price and highest yield. What about how easy it is to rent out? Popular area’s such as Dubai Marina will be more likely to rent out easier than property in Al Barsha. You also need to take into account the appreciation of the property price for when (or if) you sell in years to come.
All in all, investing in real estate in Dubai can be extremely lucrative.
Pro’s of Investing in Dubai Real Estate
- Dubai is still an up and coming city with many new properties coming on the market each year
- Dubai is a popular tourist destination, meaning that the chance of renting out your property is increased
- Dubai is a popular expat destination too, again giving you a high chance of finding long term tenants
- Your property can be used as a holiday home if you are renting it out week to week and a holiday letting
- Dubai Real Estate can see rental yield’s as high as 10%
- The population in Dubai is always growing
- Dubai offers 100% ownership of businesses to foreigners and 100% repatriation of capital investment and total profit earned.
- No property tax
- Full cash buyers can avoid the DLD mortgage fee of 0.25% of the property value
Cons of Investing in Dubai Real Estate
- Managing and monitoring any tangible asset from the other side of the world can be difficult
- High admin fees from some of the major developers
- Mortgage fee of 0.25% of the property value, paid to the DLD (Dubai Land Department)
- If you are investing from afar, you will need to pay someone to manage your property
- Oversupply issues – With Dubai growing so rapidly, the amount of properties being built as of 2021 outweighs the amount of new residents to the city. The thoughts are that Dubai will continue to grow to the most visited city in the world by 2025, however there is a risk there.
For more important information on Investing in Dubai Real Estate – Check out our guide.
Invest in Dubai’s Biggest Companies (Stocks)
Aside from investing in Real Estate, why not choose some of Dubai’s most successful companies to invest in?
At the time of writing (October 2021), you can see below that some of Dubai’s biggest companies have been on a fantastic up trend, producing impressive returns on investment.
Emirates NBD – Just over 9AED to 13AED in 12 months (+44%)
Emaar Properties – 2.60AED to 4.03AED in 12 months (+55%)
DFM (Dubai Financial Market) Index – AED2178 to 2848AED in 12 months (+31%)
DAMAC Properties 1.08AED to 1.28AED in 12 months (+19%)
Dubai Insurance Co 4.20AED to 8.33AED in 12 months (+99%)
Always make sure to do your research or appoint a financial advisor before putting down any money.
Pro’s of Investing in Companies in Dubai
- Dubai offers an investors residency visa* (For investing directly into a PLC)
- ROI can be extremely high
- Gives you a chance to invest in Dubai without the headache of managing an asset
- You can put in and pull out your investment whenever you want
*If you wish to stay in Dubai for more than 30 days you are required to apply for a residency visa. However, if you are an investor in Dubai and have invested over 70,000AED into a company, you can stay for up to 3 years at any one time!
Cons of Investing in Companies in Dubai
- Stocks can go down as quickly as they go up
- Overall risk is higher than investing in property
- Unstable political tensions in the middle east can affect price drastically
- The oil industry is shrinking which could have an affect on businesses in Dubai
Overall, choosing to invest in companies in Dubai is a great way to become a part of the ever growing city whilst not having to physically manage an asset from distance.
Other Ways of Investing in Dubai – For Expats
Although the DLP are making it easier for foreign investors to invest in Dubai, expatriates do generally find it easier. What’s more, there are more options for expats when it comes to investing in the UAE.
One way in which expats can diversify their investments is by choosing national bonds. National Bonds can be purchased relatively easily and the money can be available again within 3 months (in most cases), which means that your money isn’t tied up for too long should you need it.
The minimum deposit is 3,000AED and further deposits can be made in 100AED increments.
The good thing about national bonds is that the money is initiated 50% by the government of Dubai and is used to fund large scale projects. One example of this was in 2018 when the national bonds were used for a Real Estate project on Reem Island and another project on City Walk. If these projects turn out highly successful, then this will impact the profit rate of your bonds.
In 2019 the average ROI was 2.09%, however the more you save and the longer you save, the more profit you can earn. 3.89% profit was earned by those with more than 1million AED invested.
Gold is generally cheaper in Dubai than many other cities and countries across the world. If you’re not certain on all other investment options, then another tangible asset worth holding is gold.
One of the major benefits of buying gold whilst you are in Dubai is that there is no VAT on 24 carat gold bars.
There is a limit you can take out of Dubai though, set at 10kg per person. However, if you’re travelling as a couple that 20kg of gold can be worth a lot of money!
The average price of gold at the time of writing in the UAE is 233.75AED per gram.
For a more in depth view of the different investment options to expats in Dubai you can visit FinancialPlanninginDubai.com
Thanks for reading our guide on investing in Dubai. We hope this has helped you!