Building wealth is a matter of capitalizing on opportunities. It’s about reading the tea leaves, turning over every rock, and striking when the iron is hot. Research, timing, intuition, and follow through.
You’ll find very few successful investors without at least a little bit of their portfolio dedicated to real estate. And, on the international stage, you’d be hard pressed to find a better place to invest than the United Arab Emirates.
Today, we’ll explain why so much smart money is being sent to the UAE. On top of that, we’ll highlight a few of the most lucrative real estate markets to be found in this fast-growing region of the Arabian Peninsula.
SkyMediaPro/ShutterstockWhy Invest in Real Estate?
Real estate is one of the most reliable sources of passive income available. Choosing the right property could mean an endless supply of predictable cash flow and a treasure trove of tax advantages. Real estate investors can even leverage their holdings as a way to generate even more wealth.
Owning your own slice of a highly sought-after real estate market means more now than it ever has. The piping hot short-term rental market, inflamed by apps like AirBnB and VRBO, has opened up even more ways to up that return on investment (ROI). Particularly if you own real estate in a desirable tourist destination.
There really are too many pros to real estate investment than we have time here to discuss, but trust that parking your money in a place with a parking spot is almost always good business.
Why Choose UAE for Real Estate?
There’s a strong case to be made for choosing UAE for real estate. Every year, thousands of foreign workers find themselves relocating to the fast growing, global trading hub.¹ The number of international tourists choosing to explore the Emirates continues trending upwards too. That bodes well for savvy investors that stand to gain an estimated five to six percent ROI from renting alone.
It’s not just about ROI either. International investors interested in one day relocating to the Emirates earn a shortcut for legal residency should they choose to invest in a residential property worth AED 1 million or above and don’t hold a mortgage that exceeds 50 percent of the property’s value.² Talk about added value!
Top Cities for Real Estate Investing
Investing isn’t without its potential pitfalls. Managing that risk starts by thoroughly researching the region online. Digging into all available resources is an efficient way to expand your understanding of the UAE’s real estate market. More specifically, where to invest and how much.
The United Arab Emirates is a federation that consists of seven distinct emirates. They are:
- Abu Dhabi;
- Ajman;
- Dubai;
- Fujairah;
- Ras Al Khaimah;
- Sharjah, and;
- Umm Al Quwain.³
When it comes to real estate investment, the country’s best opportunities lie in its two most populous Emirates: Abu Dhabi and Dubai. The following list of premier real estate investment locales certainly reflects that trend.
Dubai Marina, Dubai
In the spirit of saving you time, we’ll kick off this list with the UAE’s absolute best real estate investment opportunity. An artificial canal city that was constructed along a two mile stretch of the Persian Gulf, Dubai Marina presents investors with a diverse collection of retail, commercial, and high rise apartment properties.
Locals know it as one of Dubai’s most prestigious districts and tourists love it for its endless menu of ritzy restaurants, trendy bars, and luxurious shopping centers. Residential real estate opportunities include large villas, two bedrooms apartments, penthouse suites, and reasonably priced studio units, all of which can expect to generate an ROI of roughly 6.6 percent.4
Yas Island, Abu Dhabi
Not to be outdone by its neighbor is Abu Dhabi’s breathtaking entertainment district known internationally as Yas Island. Host city to the F1 fan-favorite Abu Dhabi Grand Prix, Yas Marina is quickly becoming one of the world’s most exciting tourist destinations.
The multi-purpose leisure, shopping, and entertainment district is still a work in progress. Development of the man-made island only began in 2006, but has since added world-renowned attractions like Ferrari World, Warner Bros. World Abu Dhabi, Yas Links, and Yas Beach.5
The district’s ROI may actually be the most exciting attraction here. Investors can expect an ROI of roughly 6.6 percent on a rental apartment.
Downtown Dubai, Dubai
Downtown Dubai is easily the most recognizable district of the UAE. You can thank the 2,716.5 feet Burj Khalifa for that.6 But Downtown Dubai is home to much more than the world’s tallest building.
The bustling district is the epicenter of luxury and is just minutes away from both the Dubai International Financial Center and Dubai International Airport. It features a two mile stretch of premium restaurants, jaw dropping high-rise architecture, and the internationally acclaimed Dubai Mall.
As an investor, you’d be hard pressed to find a surer thing. Real estate in Downtown Dubai can be counted on to yield a steady 5.6 percent ROI.
Al Reef, Abu Dhabi
Al Reef’s prime location is what helps it stand out. Located on the outskirts of Abu Dhabi, the district is incredibly close to Abu Dhabi International Airport, making for an easy commute into neighboring Dubai.
The district is primarily made up of middle-income families — and that’s by design. Homes are more affordable here than say Yas Island, which makes for a much more cost effective entry point into UAE real estate. That means more growth potential too. The ROI on real estate in Al Reef is an estimated 7.1 percent for standalone villas and an impressive 8.6 percent on apartments.
Palm Jumeirah, Dubai
Good luck finding a neighborhood with a more stunning aerial view. Dubai’s artificial archipelago Palm Jumeirah is the crown jewel of a series of man-made islands known throughout the world as the Palm Islands.7 The district relies on a three mile long monorail to traverse the island and connect back to the mainland.
Just about every property includes breathtaking ocean views and private beach access. It’s not just a resort region either. This fully functional neighborhood has schools, hospitals, supermarkets, and cafes too. Rent prices here are about as expensive as it gets in Dubai, with a median ROI of roughly four percent on rental investment properties.
Saadiyat Island, Abu Dhabi
If you fancy yourself an art enthusiast, then you’ll be in your element here. Saadiyat Island is home to Abu Dhabi’s cultural capital, the Saadiyat Cultural District. Located on the western end of the naturally formed island, this district houses the Louvre Abu Dhabi, Guggenheim Abu Dhabi, and Sheikh Zayed National Museum.8
Real estate here consists of a mix of apartments and villas that can earn an estimated ROI of 8.7 and 4.6 percent, respectively. Considering the newness of this development, those numbers are likely to change in a positive way in the coming years.
Conclusion
The risks associated with investing abroad aren’t limited to where you decide to invest. Sure, the UAE has done a lot to regulate its real estate industry and protect its foreign investors, but you can never eliminate risk entirely.
Avoid dealing with private sellers and instead invest in a reputable agent that’s paid to look out for your best interest. A three percent commission is more than worth your peace of mind. Never commit to a deal that feels too good to be true, never be afraid to walk away from a deal, and, above all else, never stop researching online until you find the best real estate opportunity the UAE has to offer.