Real Estate Investment in Dubai: A Route to Long Term Visa of Dubai in 2022

March 24, 2022 11:28:01 PM

Real Estate is considered as one of the safest assets classes, it is also amongst the best hedge against inflation. The pandemic has spiralled the inflation upwards, but it is the right opportune time for an investor to reallocate their portfolio to physical assets such as real estate. Real Estate is known historically to have helped investors achieve many objectives, i.e., high returns, stable income, inflation protection and diversification in turbulent times.

Despite the adversities caused to the business and economic climate by the pandemic, real estate investments have yet remained buoyant. As a result, customers choices have also diversified, there has been growing interest in residential real estate as an asset class in the last few years.

More and more investors are attracted to the nature of secure income generated by residential real estate. An income which is fuelled by its booming demand and the insulation it provides against inflation. Over and above, it is 'a cherry on the cake' if a secure investment such as real estate, helps an investor secure a permanent residency in an economic and business capital of the world.

The promise of an high ROI which influence an investors buying decision, (ESG) environmental, social and governance standards also motivates the investors to buy real estate. As per a report by Mashreq, a lending company owned by Al Ghurair family of Dubai, the ESG factor will act as a catalyst in influencing real estate buying in the GCC countries for the next 10 years.

UAE is the highest ranked, when it comes to the benefits it provides to global investors for residency and citizenship, as per the Real Estate Index, published by Henley & Partners. In an indexing based on twelve factors influencing investment in real estate, i.e., reputation, quality of life, GDP, investment amount, rental income, property costs, processing efficiency, holding period, home requirements, saleability, and crypto friendliness. UAE scores the highest of 82 points.

The success story of real estate investments in UAE is attributable to its high-income potential, and the low cost of acquisition per square meter vis-a-vis other cities or countries. Furthermore, UAE’s reputation as a haven for real estate investor comes from the fact that it is one of the safest and secure countries to live in the world, it provides attractive employment conditions, UAE is a strong economy, the lifestyle is very rewarding and finally the opportunity to get permanent residency by investment in real estate have steered property purchase in UAE, especially in Dubai for the last few years. Real estate in Dubai is also known to provide high rental income apart from being a long-term asset.

As per the industry forecast, the exponential growth which was noticed in Dubai for the year 2021 will persist in 2022. The rationale for the continuance is the same as was for the year 2021. The time is ripe for buying of real estate in Dubai now, especially for foreigners, considering receiving 100% ownership of the property, secure pension, or Golden Visa.

What are the top benefits an investor would get by investing in a residential real estate in Dubai in 2022?

Winsome rental returns have been one of the motivations for the investors to invest in real estate in Dubai. The returns on investments (ROI) for ready to occupy properties are as high as 5% to 6%. Another evident trend is tourist opting for short term rentals, this is triggered by the want of an authentic home stay experience. Dubai is one of the destinations with highest tourist turnover, so it is a very lucrative segment for homeowners to focus and earn high short term rentals.

Real Estate investment also provides a pathway for investors to gain Long-term Residency of Dubai, this is owing to the investment-friendly Golden Visa program of UAE. An investment amounting to AED 1 million or above on a freehold residential property allows an investor to secure a long-term visa, more popularly known as Golden Visa. Investors of a jointly owned property are allowed to apply for Golden Visa if each their investment is amounting to AED 1 million.

Geographically being almost in the center of the world, having a good legal infrastructure, fostering business environment, benevolent tax structure has given Dubai the advantage and opportunity to become the Global Trade Hub. Dubai houses over 30% of the top fortune 500 companies and has attracted the best talents and business minds, it is listed amongst world's top 20 cities in (GPCI) Global Power Index 2020. Dubai as a business or financial hub is forecasted to grow three times its size in the next two years.

State-of-the-art infrastructure is one of the key factors which excites investor to consider Dubai. It has the highest numbers of skyscrapers in any city, bustling mega-malls, best-in-class transit systems (the longest driverless metro network). The Dubai international Airport is amongst the busiest airports in the world, furthermore the Jabel Ali seaport is the world’s largest man-made ports and still expanding.

Dubai has a promising mix of multicultural population, that constitutes of over 190 nationalities, a true conflation which makes immigrants feel welcome to their second home.

The Liberal Tax Law of UAE exempts all real estate developed for living, for e.g., residential properties are exempted from VAT. Dubai has no property tax, or capital gains tax, thus making it one of the best city to invest in real estate.

Dubai is one of the safest cities in the world with the best civic ecosystem. Ranked 3rd safest city in the world by The World Economic Forum, stable law and order system, and compassionate government initiatives attracts ardent investors.

Some of the key city areas of Dubai to focus for residential real estate investments in 2022 are Downtown Dubai, Jumeirah Village Circle, Business Bay, Mohammed Bin Rashid City etc.

To capitalise on the benefits real estate investment in Dubai, its is recommended that investors do not wait in expectance of a more favourable time. But work with investment migration experts, who also have a good knowledge of Dubai's real estate market trends and promising residential projects.

This article is personal opinion of the author. Article contributed by Swapan Dutta

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