Investing in Dubai –
What about the property market?

One of the most prominent and popular means of investing in Dubai is through the emirate’s vibrant property market. It’s easy to see why property is such an attractive proposition, with the potential for ongoing returns through renting out the purchase, as well as the opportunity of significant capital gains as the property hopefully increases in value.

Investing in Dubai property market

Why should property investors choose Dubai?

The first thing that attracts investors to Dubai is the phenomenal track record of its property market in recent times. Prices have risen greatly over the last five or so years, with the emirate outperforming many property markets across the world. Whilst many places have seen prices struggle to recover since the global recession took hold, both resale and rental prices have continued to grow in Dubai.

However, since the mid 2014, the prices at the market have started to decline which was bad news for those who had already purchased property in Dubai, but opened up new opportunities for those who only planning to enter the emirate’s market.

First of all, the decline was to a large extent fuelled by the government measures to avoid overpricing. As a result, the cost of local property started to stabilize smoothly, and nowadays Dubai can justly be regarded as a mature market.

Another important fact is that lower prices allow new investors to enter the market that is right now close to recovery period. That means that the property will rise in price in the long-term and now is the best time to buy.

Whilst hard-nosed investors will be drawn to raw market data of the Dubai property market (and rightly so), there are several other reasons to consider investing in Dubai. Dubai is a city that is vibrant, cosmopolitan and has a real energy about it at the moment, which is a vibe that has only increased since it was announced that Dubai had won the right to host the highly prestigious World Expo 2020. Many people believe that the Expo will only mean good things for the property market itself, with the event expected to draw in 25 million visitors, with 70 per cent of those anticipated to be from overseas. All of these people have to stay somewhere, with Dubai adding thousands of hotel rooms over the next few years to cope with the influx of visitors that will be brought in both through the Expo and the rising popularity of Dubai as a tourist destination.

What investment opportunities exist in Dubai?

Dubai offers a wealth of opportunities for those considering investing in Dubai. Whilst the residential market remains popular and brings the potential of great returns, it is by no means the only solid investment option. Many will be drawn to commercial property in the emirate, with hotel investment in particular rising in popularity thanks to Dubai’s ever-increasing popularity as a travel destination. The Dubai Department of Tourism and Commerce Marketing has targeted 20 million visitors a year by 2020, and there is every reason to suggest that Dubai will meet this target given that visitor numbers have been growing substantially for the last few years.

In 2015 Dubai welcomed more than 14.2 million overnight visitors while in 2016 the emirate is expected to be visited by more than 15 million tourists. The annual growth in visitors number of about 9% requires the extension of the city’s room supply. Right now, Dubai’s room capacity equals to more than 100,000 units while by 2020 the emirate aims to reach approximately 164,000 rooms. Throughout 2016 alone, the developers are planning to deliver nearly 10,000 units.

In terms of investing in Dubai property market, that means new long-term opportunities. On the one hand, delivering such an amount of new hotels will definitely raise the level of competition thus making the hotels to lower their prices. Besides, the cost of the rooms will decline too. However, in the long term the demand will exceed the supply and with more tourists visiting the emirate the hotels’ revenue will grow as well. Dubai hotel property also attracts foreign investors since such type of investment doesn’t require the investor’s personal participation in the management matters.