Is it now the right time to invest in Dubai?

on Aug 11, 2015
Updated: May 21, 2019

Any serious foreign property investor will, most likely, have considered the idea of investing in Dubai at some point. After all, this is a place where big things are happening right now, and are likely to continue to happen for the foreseeable future. However, property prices were too high for some people, and they climbed at a rapid rate. Things, however, have started to change.

In the first quarter of 2015, property prices in Dubai fell by 2.72%. This is the first decline since the second quarter of 2011. There was a small downturn in property prices in Dubai between 2008 and 2011. However, from 2012, prices rose quite quickly. Consultants seem to be predicting that the price of residential property in Dubai will fall by up to an additional 10% this year, a somewhat shocking figure.

This is odd because, at the moment, Dubai, as a place, is going through a period of growth. Over the years, Dubai has become a lot less dependent on its oil, which is absolutely brilliant for the economy. In fact, the economy in Dubai is expected to grow by about 5% this year.

In addition to this, rental yields on Dubai properties are some of the highest in the world. Apartments, both large and small, in Dubai can expect to achieve a rental yield of up to 7.21%, although, it generally hovers around the 6% mark. This is a huge increase on other similar locations, London in particular, where you will be lucky to achieve 3.20%.

So, what does this mean? Well, it means that Dubai is a fantastic place to invest. Yes, property prices in this area are falling. However, that does not instantly spell disaster. In fact, more foreign investors than ever are entertaining the notion of investing in Dubai residential property, and there are a few reasons why you should be considering it too:

  • Rental yields are high. They tend to be fairly stable too as more people prefer to rent in Dubai than purchase property. Yes, the barrier to entry in the market is pretty high at the moment. After all, even though property prices in Dubai have fallen in recent years, they can still be a touch expensive for those new to the property investment game. However, those who invest in Dubai property can enjoy a pretty stable income.
  • The economy in Dubai has increased drastically. In the past, Dubai was far too reliant on the oil industry. However, jobs in other industires are being created at a rapid rate. HSBC believes that the population in Dubai is growing at about 5% each and every year, most of this growth comes from those heading to Dubai in search of jobs. This, again, is going to ensure a high rental yield per property.

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