Today, the United Arab Emirates is a very stable country
Stability is a prerequisite for investing in real estate, as it is crucial for long-term growth and profitability.
You probably already know that the United Arab Emirates is known for its high level of stability. TheFragile State Index reported for this country in 2024 is 34.7, which is an excellent figure (USA 44.9).
The UAE has a solid economic foundation thanks to its large oil reserves, and the government has invested heavily in infrastructure and social services, making it a relatively prosperous and stable nation.
In addition, the country enjoys good relations with its neighbors, enabling it to remain safe and peaceful.
The United Arab Emirates will continue to grow over the next five years
Before buying a property abroad, it's essential to ascertain the country's economic situation. According to IMF projections, the United Arab Emirates will end 2023 with a growth rate of 3.5%.
For 2024, the estimate is 3.9%. And growth will continue, as the economy is expected to expand by 17.6% over the next five years, resulting in an average GDP growth rate of 3.5%. The expected sustainable growth rate offers a good opportunity to benefit from theappreciation of real estate values in the country.
This growth rate guarantees stable investment values over the long term.
The population of the United Arab Emirates is growing and getting richer
Population growth and gross domestic product per capita should be at the forefront of your mind when looking for real estate:
- a growing population means more people need housing
- higher GDP means people have more money to spend on housing (leading to higher property values over time)
In the United Arab Emirates, average GDP per capita has risen by 3.8% over the past five years.
The Emirati population is growing (+8% in 5 years).
This means that if you buy a villa in Dubai and rent it out, you'll attract more tenants with sufficient funds to cover the rent each year.
Rental yields are extremely high in the United Arab Emirates
To determine whether a property investment can be financially profitable, you need to take rental yields into account. This is the annual rental income from a property divided by its price.
For example, if a property in Dubai is purchased for AED 1,500,000 (+/- EUR 375K) and generates AED 120,000 (+/- EUR 30K) in annual rental income, the rental yield will be 8%.
According to the experts, rental properties in Dubai offer rental yields of between 8.2% and 14.9%.
In the United Arab Emirates, the inflationary effect should be moderate
Inflation is the overallincrease in the cost of living. This is why a cab fare in Dubai costs AED 30 instead of AED 25 a few years ago. If you're consideringinvesting in real estate, high inflation can have several advantages:
- the value of real estate tends to increase over time, leading to capital appreciation
- inflation can lead to higher rents, increasing the cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
Real estate acts as a hedge against inflation, preserving the value of the investment.
Diversification into real estate offers stability during inflationary periods. According to the IMF, over the next five years, the United Arab Emirates will experience an inflation rate of 10.8%, an average annual increase of 2.2%.
This data tells us that Dubai could be facing inflation in the near future, leading to higher prices. As a result,buying real estate could become more expensive.
But if you buy now, your investment will appreciate, enabling you to resell it at a higher value in the future.
Is now the right time to buy property in the United Arab Emirates?
Buying real estate in Dubai represents an irresistible opportunity, thanks to a combination of favorable factors.
The United Arab Emirates is an exceptionally stable country, offering a secure environment for real estate investment. This stability minimizes risk and contributes to a favorableinvestment climate, boosting confidence in the real estate market.
Forecasts of robust economic growth in the United Arab Emirates over the coming years reinforce its appeal as a real estate investment destination. The expectedexpansion of the economy suggests the potential for property values to appreciate, allowing capital gains to be realized over time.
Thegrowing population of the United Arab Emirates, accompanied by a gradual improvement in wealth, can stimulate demand for housing and real estate, leading to an increase in property values.
One of the main advantages for property investors in Dubai is the extremely high rental yield. The combination of demand for rental properties and the relatively high cost of living makes rental income a lucrative source. This can result in a steady stream of income, enhancing the overallappeal of property investment in the region.
Amid these positive indicators, it's important not to forget that moderate inflationary effects are expected in the United Arab Emirates. Whileinflation may have an impact on purchasing power, the country's stable economic growth,growing population and high rental yields could counterbalance this effect, preserving the value of your real estate investments.
In conclusion, real estate investment in Dubai is promising due to its stability, growth prospects, increasing population and exceptional rental yields.
Development prospects in Dubai
Development prospects in Dubai are very promising.
The local government has announced several ambitious plans to position the emirate among the world's leading powers:
Vision 2030: this project aims to transform Dubai into a global center for knowledge, sustainable development andinnovation.
Dubai 2040: This vast urban and economic plan focuses on three areas:
-Improving theattractiveness of the old districts
-Providing better housing options
-Investing in development zones
Carbon neutral by 2050: Dubai aims to become the world's first carbon-neutral city by 2050, with investments of $163 billion planned over the coming years.
In a region with a hot, arid climate, Dubai faces unique challenges when it comes to cooling homes.
The city implements effective, sustainable and ecological solutions to minimize its impact on the environment:
Materials with high thermal inertia: stone, concrete, brick to store and release heat, keeping the interior cool.
Reflective roof coverings: ceramic and aluminum tiles for protection against heat.
Bioclimatic design: using local climatic conditions to optimize indoor thermal comfort, maximize natural ventilation and reduce the need for mechanical cooling systems.
Landscaping: integrating vegetation and trees to create shady areas and reduce direct sun exposure. Villas often feature swimming pools surrounded by trees to add an extra touch of freshness.
Impact of Dubai's development on real estate investment
In just a few years, Dubai has established itself as one of the world's most dynamic locations.
Economy: Dubai's amenities are very attractive.
Entrepreneurs can easily set up and develop their businesses thanks to very low taxes and high salaries.
Weather: Dubai offers a warm, sunny climate all year round, with the beach and desert nearby, ideal for those wanting to escape rain, wind, snow and low temperatures.
Development zones: Palm Jebel Ali and Dubai Islands are two future neighborhoods with exceptional projects, including splendid villas.
Simplicity: Everything is designed to be very easy.
For example, to invest inreal estate, all you need to do is pay the first monthly instalments and have your identity papers in order.
All these prospects for real estate development in Dubai are having a very positive impact on the market.
Alongside theincrease in sales, the quality of properties is also improving.
Developers are offering increasingly exceptional projects, with large surfaces, green spaces and top-of-the-range services worthy of the finest hotels and palaces.
Economic growth
Dubai has enjoyed solid economic growth for many years, resulting in a dynamic and booming real estate market. Investments in real estate can generate attractive returns over the long term.
The real estate market in demand
Dubai attracts many investors and expatriates, creating a steady demand for real estate. This means you can easily find tenants and maintain a high occupancy rate, ensuring a regular income.
Tax benefits
Dubai offers an advantageous tax regime, with low or zero tax rates for certain sectors. This maximizes returns and reduces the tax burden on real estate investments.
Political stability
Dubai's political stability and secure environment reassure investors. The local authorities have put in place policies favorable to foreign investment, facilitating theacquisition and ownership of real estate.
Portfolio diversity
Investing in real estate in Dubai allows you to diversify your investment portfolio. Real estate is considered a tangible asset and can bring additional stability to your portfolio, particularly during periods of financial market volatility.
Profit potential
Dubai is a market where property prices tend to rise over time. By investing in real estate in Dubai, you can benefit from an appreciation in the value of your property, which can lead tosignificant capital gains on resale.
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