Bassel Alhamra Unwraps Dubai’s Property Market Evolution
Dubai's property investment landscape is flourishing, driven by a combination of strong demand, innovative developments, and favorable economic conditions. The city has emerged as a prime destination for both local and international investors, thanks to its robust infrastructure, high return on investment (ROI), and a growing expatriate population.
Dubai has long been a darling of savvy investors looking to diversify their portfolio with overseas luxury property investments. However, times change and property markets evolve, something that has become readily apparent to those who are in search of glittering lights, towering skyscrapers, and the luxury lifestyle in Dubai.
One man who has his fingers on the pulse of the market is Bassel Alhamra, senior property consultant in the United Arab Emirates His approach to finding buyers investments that provide not only exceptional ROI but also an aspirational lifestyle is based on a keen understanding of the dynamics of Dubai’s maturing property marketplace.
Bassel has noticed renewed interest from high net-worth property investors who have a medium to long-term outlook, rather than buyers who are in the Dubai market to make a quick buck, a trend that developed during the COVID-19 years.
During the COVID-19 pandemic, many markets faced downturns, but Dubai emerged as a resilient destination. This resilience created significant growth potential across various sectors of the market. However, the environment has changed dramatically since then.
As Bassel Alhamra points out, “Due to COVID, prices were artificially inflated from increased demand as investors sought a safe haven from pandemic disruptions. This led to tight supply and a cycle of price increases. The landscape has changed since then. Investors need to realize that the property market in Dubai requires a long-term investment mindset.”
A Value Proposition
Before delving into the advantages and disadvantages of property investment in Dubai, the most populous city in the United Arab Emirates, it's crucial to evaluate how this opportunity measures up against other major global cities.
When comparing post-COVID-19 property investment in Dubai with that in London and New York, significant differences emerge. London offers lower rental yields of about 3%-5% and high property prices, with the average home costing around £500,000 (around $661,000), making it less accessible for many investors. Similarly, New York's real estate market features high demand and rental yields in the same range, but with entry costs exceeding $700,000, it remains a pricey option.
Dubai offers a more attractive alternative according to Alhamra, “Dubai residential property beats New York and London hands down when it comes to rental yield of up to 9% and relatively affordable property prices, allowing investors to purchase larger and more luxurious properties within a similar budget.”
This combination of strong returns and lower entry costs positions Dubai as a compelling choice for maximizing investment potential compared to the prohibitive costs associated with London and New York.
Commercial Property Opportunity
Dubai has historically focused on residential properties, due to the undeniable lifestyle attractions of the city and the medium and long term returns. However, interest in commercial property is skyrocketing, and it’s no wonder. The average ROI for residential real estate hovers around 7-8% while commercial properties can yield returns of up to 11.1%.
The influx of professionals seeking jobs and business opportunities is also playing its part in the rapid evolution of the property landscape in Dubai.
As Bassel Alhamra explains, “People are coming here not just to live by the sea or to enjoy the nightlife, many are here for business. This shift is positively impacting the commercial market, which currently faces low supply amid growing demand. The future looks promising for commercial properties, as the demand for retail and office spaces continues to rise. With this evolving market, investors can find lucrative opportunities in Dubai's commercial real estate sector."
Present Opportunity, Future Rewards
When discussing opportunities in the Dubai real estate market, Alhamra is quick to mention the Dubai 2040 Urban Master Plan, which includes a more business-friendly approach to investment by the Dubai authorities. Under the framework of the plan, Dubai aims to become the 'best city in the world' over the next two decades. This plan emphasizes sustainability, boosting investment, and allocating 60% of the area as natural reserves, which will stimulate growth in the residential real estate market.
"The Dubai 2040 Urban Master Plan is set to make the property market more appealing for investors, not just in residential areas but also in commercial spaces. The government is investing in better transportation and port infrastructure to improve connections and boost economic growth. This plan includes building new roads, railways, airports, and ports to strengthen Dubai's role as a global trade hub and improve the quality of life for everyone living here," says Alhamra.
Dubai’s stable economy attracts high-net-worth property investors, top innovators, entrepreneurs and professionals across numerous sectors and industries. The opportunities for exceptional return on investment in either residential or commercial properties make it well worth considering for those searching for an aspirational lifestyle, superior rental income or inflation-proof investments to bolster their portfolios. In addition, the Golden Visa program offers long-term residency for investors and skilled professionals without needing a national sponsor. Furthermore, real estate investors benefit from no annual property tax and high rental yields.
However, Alhamra sounds a note of caution.
“During Dubai's recent residential boom, driven by COVID-19 disruptions, the city emerged as a safe haven, providing steady returns amidst global property uncertainty. While the market has since evolved, the fundamentals remain strong. However, markets evolve, as does legislation. If you're investing in Dubai, do your due diligence and find an advisor with a client base who can attest to their credibility, transparency, and deep market knowledge.”
For unique insights into Dubai’s rapidly changing property market and effective investment strategies, check out Bassel Alhamra’s LinkedIn page.