Strong demand continues to drive growth in the UAE housing market

Dubai has consolidated its status as a world economic powerhouse in recent decades. The United Arab Emirates has successfully transformed its arid desert landscape into a futuristic skyline, making it an international business hub. However, the real estate sector in particular saw record success in 2023, marked by a remarkable increase in both sales volume and property prices, making Dubai one of the world's most sought-after destinations.

From 2014 to 2020, the Dubai real estate market showed cyclical trends with occasional peaks and corrections, resulting in an overall stagnation that culminated in the period of the COVID-19 pandemic. In response to adverse market conditions, the Dubai government introduced various measures in 2020, including incentives, rent relief, administrative fee waivers and deferred payment plans, to boost the real estate sector. This led to a time of lockdowns of world capitals and restrictions on the global economy to gain a competitive advantage from which the city now derives its growth potential.

Return on investment of 8-10% 

The demand for rentals is very high in Dubai due to the constant influx of residents and massive tourism, especially in areas such as Dubai Marina or Dubai Downtown. Thanks to this, the return on investment in the case of providing your property for long-term or short-term rental reaches 8-10% per year.

In addition, Dubai reported a total of 114,400 units of apartments and villas sold last year, representing a remarkable 44% increase compared to 2022 figures. Median apartment prices in Dubai reached almost AED 19,300 (approx. EUR 4,860) per square meter in 2023 meter, which reflects a significant year-on-year growth of 25%. The villa segment in Dubai saw even more significant growth in 2023, where the median price per square meter increased by 37% year-on-year.

In general, capital values across Dubai increased by 20% in 2023, with a further 5-7% increase in prices in the first months of 2024. In addition, the Dubai 2040 Urban Master Plan, a sustainable development and innovation initiative, further strengthens the prospects for real estate investment. 

Graph 2: Percentage annual change in real estate prices in Dubai and Abu Dhabi.

The fifth most visited city in the world

According to data from the Tourism Authority, over 17 million tourists visited Dubai in 2023. However, the permanent demand for real estate stems not only from tourism, but mainly from the influx of residents. With an average increase of 10.7% per year, the fastest population growth in the world, foreigners currently make up more than 85% of the population.

They are attracted by the city's reputation for being friendly to life and business, the tax-free regime and the peg of the local currency, the dirham, to the US dollar, which provides a hedge against currency depreciation.

No taxes and easy to get a visa

The fact that there are no personal income or property taxes in Dubai allows investors to retain a substantial portion of their income. The absence of personal income and property taxes thus leads to increased liquidity for further investments. In addition, the high demand for luxury properties in Dubai contributes to an attractive return on investment.

In recent years, the United Arab Emirates has introduced a comprehensive range of visa types that facilitate the inflow of investment and residents, thereby supporting the growth of the real estate market and economic stability.

The most important is the 10-year Golden visa, which provides investors with a long-term stay with the possibility of extension and a number of benefits. The condition is to invest at least 2,000,000 AED, which corresponds to the amount of approximately 512 200 EUR. However, if you want to spend less and are not looking for a long stay, another option is to get a 2-year visa, which costs only 750,000 AED, or 192,000 EUR. 

The safest city in the world

With a low crime rate and a robust security system, Dubai is one of the safest cities in the world. Together with political stability and a quality legal system, this makes it a reliable destination attracting millions of tourists and professionals looking for short-term or long-term housing every year.

World-class stability and infrastructure

Over the past three decades, Dubai has witnessed the creation of world-class infrastructure, whether it is the well-known Sheik Zayed Road, excellent public transport or the development of business and residential areas such as the artificial island of Palm Jumeirah, the surroundings of Dubai Marina and Dubai Downtown or Business Bay.

These developments in residential and commercial real estate showcase Dubai as a city that adapts to the changing needs of its residents to ensure the highest quality of life and economic sustainability. However, the quality of life goes far beyond remarkable infrastructure and a quality health and education system. Dubai offers a cosmopolitan environment from a lively social and cultural scene to a luxurious gastronomic scene and shopping districts such as the Dubai Mall to all kinds of sporting opportunities.

Graph 5: Dubai GDP per capita. 

Development of median prices in 2023 in the five most popular neighborhoods of Dubai

When it comes to property prices for 2023, Jumeriah Village Circle remains one of the most affordable locations. Despite a surge in demand, with the number of properties sold doubling year-on-year with 13,600 units sold, the median price rose by around 15%, standing at AED 11,100 (EUR 2,840) per square meter at the end of the year.

The second place in popularity was occupied by Dubai Marina with its 9.8 thousand sold units (an increase of 29%). The median price per square meter reached AED 29,400 (EUR 7,530), which meant a year-on-year increase of almost 38%. Dubai Downtown maintained a stable year-on-year price per square meter of AED 24,600 (EUR 6,300), but the median rent increased by an impressive 36% to reach AED 109,000 (EUR 27,900) in 2023.

Business Bay reached AED 20,700 per square meter (EUR 5,300), a year-on-year increase of almost 18%. With almost 4.7 thousand apartments sold in 2023 (29% increase in volume), Dubai Creek Harbor achieved a median price increase of almost 13% with a level of AED 21,600 per square meter (EUR 5,530).

Graph 6: Year-on-year price change in AED per square foot (converted to sqm in the text).