Why is now the time to invest in Dubai real estate?14 Nov 2018
It is now increasingly easier and affordable to own real estate within the Emirate of Dubai. This follows the continued decline of real estate prices, the relaxation of foreign direct investment laws and the recent signing of two Memorandums of Understanding (MoU) between the Dubai land Department (DLD) and both the Dubai International Finance Centre (DIFC) and Abu Dhabi Global Market (ADGM).
On 4th May 2017, a MoU was entered into between the DLD and DIFC, permitting certain DIFC companies and other establishments to own real estate within the Emirate of Dubai and paving the way for the ADGM to follow suit. On 7th November 2018 the ADGM announced the execution of a similar MoU with the DLD. This enables legal entities registered in the ADGM to own properties in Dubai.
The new regulations are a crucial part of efforts to further tap into the expat population’s massive investment potential (the UAE has the world's highest net migration rate - 88.52%) by making it easier for them to own real estate within Dubai. The regulations enhance Dubai as an international hub for individuals, companies and entrepreneurs looking to take full advantage of a city committed to ease of living, innovation and business success.
A real opportunity
Since Dubai's restrictive foreign investment rules were lifted as a result of the new Foreign Direct Investment law (FDI Law) - which permits foreign investors to own more than 49% of a company outside of free zones - investors have been searching for the best structure to ring fence their assets.
When investing in Dubai real estate, investors now have a choice between the DIFC’s and ADGM’s common law regulatory frameworks, which accompany a range of sophisticated structures such as SPVs, funds and foundations for structuring their real estate ownership.
The new regulations come at a time when Dubai's real estate prices are continuing to decline. According to real estate consultancy Chestertons, average apartment and villa sales prices are down 6% from the previous quarter and out of the top 43 cities worldwide, Dubai's prime property prices witnessed the fifth highest decline. In some locations such as Dubai Discovery Gardens, rental prices dropped by a staggering 13%. The declining prices do not seem ready relent either; as stated in Chestertons' quarterly Dubai Market Report, they expect the downwards trend to continue over the next few years.
The reason for the fall in prices is subject to debate. However, one reason may be the large supply of residential apartments which are under construction, of which, a further 80,000 are expected to be completed before the start of the Expo 2020. A 'festival of human ingenuity', the Expo intends to showcase and explore what is possible when new ideas and people connect. It is expected to draw in millions of visitors throughout the year and has resulted in a swathe of state spending and foreign investment within the Emirate.
Together, the relaxation of foreign investment laws, the decline in real estate prices and the introduction of 10 year residency visas for investors has engendered an extremely hospitable investment environment in Dubai. Naturally, as investors' confidence in the region increases, more people will purchase properties to live in or as an investment.
Helping you set up or relocate in the UAE
Dubai can be a complex and challenging environment in which to navigate investments. Ocorian can help structure and secure the investment and assist in the relocation.
With over eight years’ presence in Dubai, Ocorian's UAE office assists companies and individuals to relocate to Dubai. We help with all visa and business application procedures, and will deal with the relevant authorities on your behalf. Find out more about how Ocorian can help you with your plans in the UAE here.
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