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Everything you need to know is included in our the UAE Property Pack
Are you thinking of investing in property in the UAE? Are you wondering if it's the right time to buy?
Market timing is a matter where people have different points of view. The real estate agent you consulted in the UAE might advise you that now is the opportune time to buy property, while your relative who actually resides in Dubai may suggest waiting for more favorable market conditions.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in the UAE, we believe in solid evidence and concrete data, not mere opinions or rumors.
We have carefully gathered and analyzed official reports and government website statistics. Using this information, we have created a reliable database. Here's what we found that can help you decide whether it's a good time to buy real estate in the UAE.
Enjoy the article!
How is the property market in the UAE currently?
The United Arab Emirates is, today, a very stable country
Positive
Stability is a necessary condition when investing in real estate because it is crucial for long-term growth and profitability. It is an information you need as a foreigner looking to buy a property in the UAE.
You are probably already familiar with the fact that the UAE is known for its strong stability. The last Fragile State Index reported for this country is 34.7, which is an extraordinary number.
The United Arab Emirates is a very stable country today due to its strategic diversification of the economy beyond oil, focusing on sectors like tourism, finance, and technology, which has reduced economic vulnerability and fostered sustainable growth. Additionally, the UAE's strong governance framework, characterized by effective leadership, investment in infrastructure, and social welfare programs, has ensured internal stability and security, attracting foreign investment and fostering a harmonious multicultural society.
This country offers a stable ground for investment. Let's proceed to assess the economic forecast.
The United Arab Emirates will keep growing in the next 5 years
Positive
Before buying a property, see how well the country's economy is doing.
As projected by the IMF, the UAE will end 2024 with a growth rate of 3.5%, which shows the country is on the right path. Regarding 2025, the consensus estimate is 4.2%.
Besides that, the economy will keep growing since the UAE's economy is expected to increase by 18.4% during the next 5 years, resulting in an average GDP growth rate of 3.7%.
The expected sustainable growth rate in the UAE indicates a stable and expanding economy, which can lead to increased demand for real estate as more businesses and people move to the area. This growth can drive property values up, offering potential investors the opportunity for good returns on their real estate investments.
Nonetheless, there are other indicators to watch.
The United Arab Emirates' population is growing and getting (a bit) richer
Positive
Population growth and GDP per capita should be on your mind when you're in the market for real estate because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In the UAE, the average GDP per capita has changed by 3.8% over the last 5 years. Despite being minimal, there is still some observable growth. Furthermore, the Emirati population is growing (+21% in 5 years).
This means that, if you purchase a lavish villa in Dubai and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is likely to go up in Emirati cities, such as Dubai, Abu Dhabi, or Sharjah in 2025.
Rental yields are extremely high in the UAE
Positive
To understand if a property investment can be financially rewarding, consider the expected rental yields.
It's the annual rental income of a property divided by its price. For example, if a property in the United Arab Emirates is purchased for 1,500,000 AED and generates 90,000 AED in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in the UAE offer gross rental yields ranging from 8.2% and 10.9%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in the UAE.
It's among the best in the world.
Everything you need to know is included in our the UAE Property Pack
In the UAE, expect minimal inflationary effect
Neutral
Inflation is the overall increase in the cost of living.
It's when your usual taxi ride in Dubai costs 30 dirhams instead of 25 dirhams a couple of years ago.
If you're contemplating investing in a property, high inflation can offer several advantages:
- Property values have a tendency to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
Based on the IMF's outlook, over the next 5 years, the UAE will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data is telling us that the UAE is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in the UAE then?
Let's wrap things up!
2025 could be an excellent time to consider buying property in the UAE, primarily because the country is known for its stability. The UAE has established itself as a safe and secure place for both residents and investors, which is a crucial factor when making long-term investments like real estate. This stability provides a solid foundation for property investments, as it reduces the risks associated with political or economic upheaval that can affect property values.
Moreover, the UAE's economy is on a promising growth trajectory, with an expected increase of 18.4% over the next five years, translating to an average GDP growth rate of 3.7%. This economic expansion is likely to attract more businesses and individuals to the region, boosting demand for real estate. As demand increases, property values are likely to rise, offering investors the potential for significant returns on their investments. This makes 2025 a potentially strategic time to enter the market before prices climb higher.
In addition to economic growth, the UAE's population is also on the rise, with residents becoming slightly wealthier. This demographic trend suggests a growing need for housing and commercial spaces, further driving demand in the real estate market. As more people move to the UAE and seek better living standards, the real estate sector is poised to benefit, making it an attractive option for investors looking to capitalize on these changes.
Finally, the UAE offers attractive rental yields, with gross rental yields ranging from 8.2% to 10.9%, according to Numbeo. This makes property investment not only a potentially lucrative venture in terms of capital appreciation but also a source of steady rental income. Additionally, the UAE is expected to experience minimal inflationary effects, which means that the purchasing power of your investment is likely to remain stable, further enhancing the appeal of buying property in the region by 2025.
We genuinely hope this article has been helpful and informative to you!. If you need to know more, you can check our our pack of documents related to the real estate market in the UAE.
-Will real estate prices go up in the UAE?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.