Is now a good time to buy property in Dubai?

The COVID-19 pandemic has taken its toll on all of us, with many people turning uncertain about making their next move. Despite this uncertainty, there has never been a better time to start investing in Dubai.

With property prices declining in recent years across the UAE, there are plenty of opportunities to buy property in Dubai at a cheap price. As the fundamental principle of investing shows us, buying low and selling high is the key to success. Buying a house in Dubai and investing wisely at these pivotal moments can lead to abundant returns on investment when property prices move up.

Here are our five top reasons as to why now is the perfect time to buy property in Dubai:

1) Dubai property prices are low

Dubai property prices have been on a decline but are now starting to recover in certain communities. As our Q4 2020 UAE Property Market Report demonstrated, Property Monitor found that the average residential property prices in Dubai declined by 4.4% over the 12-month period between Q4 2019 and Q4 2020. Yet, the prices grew by 1.2% on a quarterly basis, showing stability and moderate price appreciation.

In simple terms, this could mean that housing in Dubai can be bought at a relatively low price point today but is set to appreciate. By growing your property portfolio and getting ahead of the market when Dubai real estate prices are low, there is the opportunity to potentially make significant profits as prices begin to rise again.

Investors need to be aware and identify specific assets that are undersupplied in the market. For example, villas in prime locations such as Jumeriah Golf Estates, Jumeriah Park, Arabian Ranches and Palm Jumeirah have shown a strong performance. Similarly, properties in Downtown Dubai and Dubai Marina have also shown resilience over the last few quarters, exhibiting their potential in a recovering market.

2) The cost of living in Dubai is reasonable

For those interested in living in Dubai or considering renting out property, it is important to understand the costs of living in Dubai. In 2019, according to an article in The National, Dubai was found to be 28% cheaper than living in New York and was ranked as the 58^th most expensive city in the world.

A survey conducted by the UAE Ministry of Economy found that the average household income in the UAE is AED 18,248.60. While there are no minimum wage laws in the UAE, there are certain rules and guidelines for the minimum salaries of different classes of workers:

• University graduates are entitled to AED 12,000 per month
• Skilled technicians should earn a minimum of AED 7,000 per month
• Skilled labourers should be paid a minimum of AED 5,000 per month

Dubai and the UAE does not have the concept of income tax so individuals receive all the income they earn. Also, it is mandatory for employers to provide insurance to employees, which sometimes extends to their families. In terms of housing and schooling, there are several options available at various price points across the emirate.

Keeping all this in mind, compared to a lot of other capital cities such as London, the price of living in Dubai is relatively reasonable.

3) The rental market is in decline

As property prices decline, the Dubai rental market has been steadily falling as well. Average apartment rents declined by 16% over the 12-month period from Q4 2019 to Q4 2020. We have seen that people are now less inclined to look for apartments for rent in Dubai, instead choosing to move into bigger spaces or better communities after the pandemic forced people to stay at home.

With more properties set to hit the market this year and the increased possibility of cost savings on rent, tenants are currently governing the rental market.

This does not mean, however, that it is a bad time to become a Dubai landlord. Investors need to think strategically about the property they buy to let, choosing bigger homes in popular neighbourhoods offered at competitive rental prices.

4) Tourism is booming

Dubai holidays have become a popular choice among international tourists with the high vaccination rates of the UAE and strict measures in place to ensure safety of residents and visitors. Between the Burj Khalifa, luxury shopping malls, numerous hotels and unique locations like the Palm Jumeirah, it is no wonder that Dubai visitors are drawn to this opulent city for fun, relaxation, and business.

Even domestic travel within the UAE has improved in the wake of COVID-19, with the number of room nights sold to domestic visitors jumping to 5.68 million between May and October 2020 as the pandemic restricted international travel.

In 2020, Dubai has seen an increase in 5-star hotels and the number of rooms available, yet there has been a decrease in standard hotel apartments. With the average length of guests’ stay increasing to 4.2 nights in 2020, there is untapped potential in the hotel apartment sector with room to grow.

Dubai is growing

Statistics show that the UAE’s gross domestic product growth rate is estimated to grow by approximately 1.35% in 2021 compared to the previous year. By 2024, the GDP growth rate is predicted to increase to 2.57%.

According to data from New World Wealth, the UAE has emerged as the wealthiest country in the Middle East, with Dubai as the richest city. This comes as no surprise as Dubai is known as the ‘business hub’ of the Middle East. More and more people are being drawn to the capital city with Dubai’s population estimated to stand at 2,921,376 in 2021.

Final thoughts

Known for its stunning architecture, luxury shopping, and white sandy beaches, Dubai has become a popular hotspot for nationals and travellers alike.

There is still untapped potential on the shores of Dubai and while house prices are low this could be the prime time to secure property in the city ahead of any market booms.

For in-depth support and guidance, contact us today to speak to our expert advisers. Both our residential valuation team and strategy consultants have a wealth of experience and knowledge of the local area, with their fingers on the pulse of this market.