When asked about property investment, most savvy property investors in Singapore would typically associate that question with popular real estate markets such as UK, Australia and even Japan.
Dubai is a relatively new investment destination for most property investors in SEA, yet that is now fast changing. For the past year, many of the property investors in SEA have shifted their sight to newer under-the-radar investment destinations such as Dubai. For that reason, let’s look at 4 reasons why Dubai made the list.
Investing in Dubai is Tax-Free
For years now, Dubai has been widely regarded as a regional and global centre for business with its real estate market compared to the likes of global real estate markets such as New York and London.
One of the major perks of investing in Dubai is that it is a tax-free city and there are no residential property taxes. Anyone who has ever invested in foreign property and paid capital gains tax will know how big of an advantage this is.
Property investors will also want to ensure that their property is a home that others will want to lease. The tax-free environment makes Dubai an incredibly appealing place for professionals to move to and work, which in turn, provides for an ideal combination of no capital gains tax on your property and a steady demand for homes in Dubai.
To maximize your potential, do ensure that your home is built by reputable local developers and is in an area where housing is in demand.
Rental yield that is more attractive than other global cities
Property prices in Dubai are relatively affordable compared with other global cities such as London, Hongkong, etc. Despite that, it is one of the fastest growing economies in the world at a time when many other global cities have shown signs of slowing down.
The average rental yield hovers around 7% in the main areas of Dubai but can be as high as 10% in certain areas where there is strong housing demand. With bank interest loans hovering under 4% this makes investing in Dubai property attractive for professional property investors.
Dubai is Pro-Foreign Investment
For foreign investors, entering the Dubai market is a relatively straightforward forward process with minimal paperwork.
Foreigners are also allowed to have freehold ownership of the property in freezone areas, this means you will own the land on which the property stands on.
In addition to that, Dubai is a pro-landlord market, and the law protects landlords from some of the typical issues that may befall property investment owners. For instance, non-payment of rental fees or even maintenance fees. It is common for landlords to require a one-year payment of rent upfront, which is not practiced in any other global cities.
World Expo 2020 plus a fast-growing ex-pat population
The World Expo 2020 is scheduled to be held in Dubai and the UAE government is expecting ~25 million visitors to Dubai during this Expo which is further expected to boost tourism and trade. Analysts have estimated that the World Expo 2020 win will create approximately 300,000 new jobs and will boost Dubai’s economy by a staggering $23 billion.
Even without the announcement of World Expo 2020, there has been a large and fast-growing community of ex-pats who come to Dubai on work contracts for a stipulated number of years or even months. Many of these ex-pats choose to rent a home during their stay with their employment contracts typically in the form of one-year renewable contracts that are paid to them in advance.
With the combination of World Expo 2020 and the high ex-pat population, it offers property investors an excellent opportunity to benefit from this anticipated rise in demand in the coming years.