Unpacking the latest UAE real estate developments impacting the property market

Dubai’s real estate market witnessed 6,651 real estate transactions worth $4.98 billion (AED 18.3 billion) in May 2022, marking the highest figures for the month of May in 13 years in terms of real estate sales volume and value.

The transaction figures reported in May 2022 also marks a 51.5 percent increase year-on-year for sales volume and a 65.4 percent increase for sales value compared to May 2021.

The director of Data and Digital Transformation at Allsopp & Allsopp, Lynnette Sacchetto, said: “The Dubai real estate market continues to consistently show steady growth month-on-month when compared to last year. Also, just like last month, we saw a repeat in trend with May being the second-highest on record for sales volume and value, with May 2009 being the highest.

Here is an overview of all the recent developments in the region’s ever-evolving real estate landscape that could impact the markets in the months to come:

  1. Dubai property prices could as much as double in next decade, says haus & haus
  2. Why the UAE’s new Golden Visa regulations are a ‘game changer’ for the real estate industry
  3. How Dubai Land Department making all real estate data publicly available will strengthen transparency
  4. How the inheritance court set up by Sheikh Maktoum bin Mohammed will help expedite civil, real estate, commercial lawsuits
  5. Why investors are lining up to own and operate Airbnb properties near the Burj Khalifa
  6. UK inheritance tax net spreads to UAE properties: Impact and how you can plan for it
  7. Using crypto to pay for rent and buy UAE property is the biggest opportunity since Palm Jumeirah: expert
  8. Nakheel accepts crypto payments for rent and real estate purchases in partnership with Hayvn
  9. Damac permits property buyers to pay in Bitcoin and Ethereum as crypto use in real estate picks up

1. Dubai property prices could as much as double in next decade, says haus & haus

Latest real estate news about Dubai's property prices

Property agent haus & haus has released a bullish report into Dubai’s property market, with its managing director predicting prices to as much as double within the next 10 years.

“As we move past one of the most unprecedented economic setbacks in generations with the pandemic, the outlook for Dubai’s economy and real estate market is very positive,” said Simon Baker, Managing Director of haus & haus real estate.

As Dubai’s marketplace matures, haus & haus believes investors can expect prices to increase significantly as we climb out of the bottom of the current economic cycle. “We would expect prices to as much as double within the next decade,” Mr Baker added.

Noting that Dubai property prices are currently at the same level as they were around eight years ago, coupled with the planned population growth, he feels this bodes well for property values. “Add to this the fact that the Dubai government has a target of reaching six million residents by 2040 – essentially doubling the current population – and we can see there are major capital growth opportunities.”

In the updated investment guide for 2022 Mr Baker wrote that property prices mid-2020 were reset to levels similar to what we experienced after the financial crisis of 2008/2009 “and it seemed like those of us who were too fearful to enter the property market last time have been given a second chance.”

But he believes this time around things could be even better. “Dubai’s property market is well regulated, the population has been growing steadily every year (doubling in the last ten years), and investment in industries continues to grow.”

Over the next 10 years he said that a growing population of long-term residents will absorb the shrinking supply of new properties and investors will continue to put their money in businesses in the region.

“You can expect to see the typically high Dubai rental yields of up to 7-8 percent start to soften as property prices begin to pick up. Realistically, we’ll see yields closer to 5 percent in the prime communities as the emirate’s property market continues to mature.”

However, he commented that this is still significantly better than other major cities such as London (2.7 percent) and New York (2.9 percent).

haus & haus noted that for 2021 there were over 84,196 total transactions, worth AED 300 billion as the market continues to recover.

2. Why the UAE’s new Golden Visa regulations are a ‘game changer’ for the real estate industry

Impact of the Golden Visa regulations on the real estate industry.

The Golden Visa regulations are a “game-changer” for the UAE’s real estate industry, building on the momentum it’s garnered over the past year and a half.

The flexible regulations to obtain the ten-year residency through real estate will encourage further foreign investments in the country, industry stakeholders told Arabian Business.

“This is yet another proactive initiative from the UAE government, which will certainly entice more foreign investment into the country. In particular, the new visa scheme for property investors is quite appealing to say the least,” said Lynnette Sacchetto, a UAE-based real estate industry consultant.

“The fact that you can get a Golden Visa now when purchasing a secondary or off-plan property for AED2million which can be mortgaged pretty much covers all common scenarios for not only investors but also for UAE residents who own property.

Lynnette Sacchetto, a UAE-based real estate industry consultant talks about the positive impact the Golden Visa will have on the real estate industry.
Lynnette Sacchetto, a UAE-based real estate industry consultant

“This is a game-changer, just like so many recent initiatives, and will further push forward the UAE as the central business and investment hub in the region. This will also have a positive impact on the Dubai real estate market, which has been going through record-breaking momentums over the past year and a half,” she continued.

Under the new executive regulations, entrepreneurs, exceptional talents, scientists and professionals, outstanding students and graduates are also among those eligible for the Golden Visa.

“The updated UAE Golden Visa regulation is a great initiative for the country, which has already seen tremendous growth in its real estate sector over the last couple of years, especially with how it recovered after the pandemic. The flexibility that these new rules have to offer, will provide residents with a strong reason to invest in the country long term and allow non-residents to make UAE their second home,” Madhav Dhar, co-founder and COO, ZāZEN Properties, said.

Madhav Dhar, co-founder of ZāZEN Properties talks about the flexibility the new Golden Visa provides the real estate sector.
Madhav Dhar, co-founder and COO, ZāZEN Properties

“Specifically, the ability to obtain a Golden Visa when purchasing a property with a mortgage and even purchasing an off-plan property, will help bring in more young professionals who have the ability to contribute positively while also being able to afford a home, since the upfront cash outlay is less,” he continued.

Dubai’s property market has been on an upward trajectory for the past year with the city’s residential market recording more than 52,000 apartments and villa real estate transactions in 2021, totalling $31bn (AED 114.2bn), more than the total for 2019 and 2020 combined.

“Changes in residency requirements in Dubai have had a significant positive impact on the real estate market in the last two years. Yesterday’s announcement is a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in buyers, bolstering an already active market,” said Andrew Cummings, partner – head of prime residential at Knight Frank Middle East.

Andrew Cummings, head of prime residential at Knight Frank Middle East talks about the Golden Visa's effects on real estate.
Andrew Cummings, partner – head of prime residential at Knight Frank Middle East

“The changes to enable off-plan investors to also gain residency will have the biggest impact and we are likely to see an increasing demand for off-plan properties, with buyers no longer being restricted to having to have a title deed of a ready property in hand. Whether or not this will lead to downward pressure on the resale market is more uncertain, with demand in this area predominantly being driven by end users rather than investors.

“Either way, decisions like this further the attractiveness of Dubai as a destination for investors and end users like and we anticipate this will lead to further strengthening of the market in coming years,” he added.

3. How Dubai Land Department making all real estate data publicly available will strengthen transparency

In April, 2022, the Dubai Land Department made the landmark move to make all of its real estate data publicly available on its website.

It contains everything from sales transactions, gifts, mortgages, Ejari registrations, valuations, land, building and unit data, as well as broker, developer, and projects data.

This includes unique identifiers for each transaction such as property IDs and Ejari contract numbers.

Lynnette Sacchetto, a leading consultant who is recognised as an expert and a thought leader in the UAE’s real estate industry, said: “This is a significant, proactive initiative from the Dubai government, which will continue to strengthen transparency in the real estate market and position Dubai, on par, amongst other mature real estate markets.

“As transparency increases, we will also see investment, including foreign direct investment, increase as well.”

In 2020, the JLL Global Real Estate Transparency Index was released and Dubai climbed up
three spots to the 36th place globally
, which placed Dubai as a semi-transparent market and on the ‘cusp on transparency’.

Sacchetto added: “The report credited the city’s improvement to Mo’asher, which is Dubai’s own official house price index. As the next report is set to be released this year, I truly believe that Dubai will move up the ranks and into the transparency category, with the majority of the reason attributed to this landmark move done by the Dubai Land Department this week.”

The transparency that comes with Dubai Land Department's move to make all real estate data public.

Dubai Land Department’s decisive moves towards transparency

In 2013, the Dubai Land Department took the first steps to make their sales transaction data
available on their public website. It included parts of the transactions such as transaction date, location name in Arabic and price. Even though it was a limited data set at that time, it was still a very good starting point and something no other city in the region had done before.

“The data became instantly useful, by real estate professionals across the city and used in
various reports and research throughout the region. For the first time, we had credible usable data about Dubai real estate transactions and it brought Dubai closer to international standards in transparency,” Sacchetto explained.

As the years progressed, the Dubai Land Department released various market reports and worked with the private sector to expose the data to the public.

Then in 2019, they released Mo’asher, the first official house price index of the city of Dubai for sales and the rental price performance index was released in January of 2022.

In 2021, the land department partnered with various private entities where they shared their data in return for the private sector to create meaningful products for consumers.

“All of these efforts were done as a way to make transaction data available in the most efficient and responsible manner possible and it was a success,” Sacchetto concluded.

4. How the inheritance court set up by Sheikh Maktoum bin Mohammed will help expedite civil, real estate, commercial lawsuits

Inheritance cases in Dubai will now be handled within Dubai Courts by a dedicated special inheritance court, which was launched by Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, the Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, and Chairman of the Dubai Judicial Council.

The new court is tasked with the settlement of inheritance lawsuits, which include inventory listing disputes, liquidation or division of inheritance among heirs, and civil, real estate, commercial, and other lawsuits arising from disputes.

The new court, which serves as a single authority to settle inheritance lawsuits, aims to eliminate procedural hurdles and delays and expedite litigation processes.

The court also seeks to preserve social and family bonds by ensuring speedy settlement of lawsuits. The new court will enable cases and requests related to inheritance to be handled by a single judicial body within a specific time frame.

How the new inheritance court will help the real estate industry.

The preparation time for cases heard by the court should not exceed 30 days from the date of registration. The litigation process should not exceed 12 months, unless the judge chairing the court deems otherwise.

The decisions of the court are final and not subject to appeal by ordinary means, according to the state-run news agency, Wam.

The new court will be chaired by a Court of Cassation judge and its members will include a Court of Appeals judge and a Court of First Instance judge.

Depending on the nature of a case, the special inheritance court will bring together judges with diverse specialisations.

The establishment of the specialised court is in line with Dubai’s constant efforts to enhance the judicial system in Dubai Courts and streamline the litigation process.

The move is also part of implementing the directives of Sheikh Mohammed bin Rashid Al Maktoum, the Vice President, Prime Minister and Ruler of Dubai, to create a world-class judicial system that contributes to further strengthening social and economic wellbeing in the emirate.

5. Why investors are lining up to own and operate Airbnb properties near the Burj Khalifa

Airbnb properties in Dubai make the most money, according to a recent study by CIA Landlord Insurance, which shows the emirate topping a global list of the most profitable locations for landlords to own and operate Airbnb real estate.

The Airbnb market has boomed across the world in recent years, but landlords and investors looking to venture into this space have begun assessing places around the globe that can make the most money.

From the cost of buying a property in cities around the world, to looking at how much landlords can charge for nightly stays, the study established the most profitable locations. 

The study also revealed the most instagrammed landmarks around the world to shed light on where there is high demand for travellers needing a place to stay.

How Dubai's Airbnb's make the most money

Recover investment on an Airbnb within four months of renting it

Dubai is the most profitable location for landlords as it takes only four months for them to earn their money back after investing in a property.

Landlords who have a property close to the Burj Khalifa, the world’s tallest building, make the most money of all Airbnb owners. With the average cost of stay at approximately £930 a night, landlords can make a whopping £6,510 if guests stay for 7 nights, according to the CIA Landlord Insurance study.

The average price to buy an apartment in the city is £112,624. This means that within 121 nights of renting out the Airbnb, landlords can make their money back.

However, this is only a profitable location for landlords who have a property near the Burj Khalifa, as those further away rent for just £181 per night, the study stated.

The top five most profitable cities for Airbnb landlords

Rank City  Country  The Average Price of Buying a 1 Bed Apartment in the City (£) The Average Cost to stay in an Airbnb here for 1 night (£) The Average Number of Nights a Landlord Would Need to Airbnb Their Property to Make Their Money Back  
1 Dubai UAE 112,624 930 121
2 Hilo USA 51,300 257 200
3 Hanoi Vietnam 66,776 232 288
4 Nairobi Kenya 108,447 367 295
5 Niagara Falls City USA 37,620 115 327

The second most profitable location for landlords is Hilo, in Hawaii, where it takes just 200 nights to be sold for landlords to make their money back.

With the average cost of buying an apartment here also over cheaper than Dubai, £51,300, this is a safer investment option for those just beginning their Airbnb journey.

New York ranks second for charging the most for Airbnbs, with those near Central Park costing £767 per night.

The CIA Landlord Insurance study also shows that Cuzco, in Peru, is the most unprofitable location for landlords to begin their Airbnb business as it would take over 13 years (4,810 nights) for a landlord to earn their money back here.

London ranks fourth on the list of least profitable locations, as it would take Airbnb landlords over five and a half years (2,803 nights) to earn their money back after investing in a property here. These stats are also based on if the property is occupied by a paying customer every single night so landlords should factor in ‘on’ and ‘off’ seasons and general costs of upkeeping the property.

Most instagrammed landmarks across the globe

The research also looked into the most instagrammed locations around the world to reveal where there is a demand for travellers.

The most instagrammed landmark is Central Park in New York, where over seven million photos have been posted across the social media site along with the hashtag ‘#CentralPark.’

The Eiffel Tower, in Paris, is the second most instagrammed landmark with just under seven million photos tagged here.

Finally, Dubai comes third with just over five and a half million instagram photos tagged at the Burj Khalifa.

With this location being popular among social media, and profitable for landmarks it is clear that this is a city where landlords should look towards building into their portfolio.

6. UK inheritance tax net spreads to UAE properties: Impact and how you can plan for it

UK property is a traditional favourite for investors from all over the world and particularly the UAE.

London is considered a safe haven and an attractive destination for investors perhaps more than any other major city in the world some would argue. With its solid track record, clear legal title and of course lots to do, it remains a favourite place for foreign investors in this region.

Typically, investors purchase using structures such as Trusts, Special Purpose Vehicles (SPV), or similar offshore corporate structures, and for many years, this was the standard method to buy UK property in order to mitigate exposure to Capital Gain and Inheritance/Death taxes.

However, recent tax changes mean this is no longer the case and with events in Eastern Europe, more legislation is being rushed through parliament to uncover ultimate beneficial owners (UBO) of assets.

Tim Searle, founder and chairman of Globaleye talks about the impact of the UK's inheritance tax net spreads on UAE properties
Tim Searle, founder and chairman of Globaleye

As a result, UK property attracts 40 percent Death Tax sometimes referred to as Inheritance/Estate Tax (IHT) regardless of structure. The tax is levied on the value at time of death and must be paid before the asset can be passed on to the family.

Moreover, this tax bill must be paid within 6 months otherwise the British Government (HMRC – Her Majesty’s Revenue and Customs) reserve the right to fire sell and/or confiscate the asset to recoup the unpaid tax.

To make matters worse, the asset cannot be sold post-death by the family to meet the IHT bill, this must be settled in cash before HMRC gives access to the asset.

Typically, wealthy families have complex affairs with assets in multiple jurisdictions, so until probate has been granted in all locations, there can be a liquidity strain on the family at a very difficult period which could result in losing the asset(s).

Further delay could be created if Shariah principles apply to the estate too but this will have no bearing on the strict timeline above.  

The planning options are pretty slim but in basic terms they are as follow:

  1. Sell the Property – not always attractive since many property assets are legacy and intended to be passed down the family. Similarly, UK property prices remain buoyant so bailing on prime property assets is not tenable.
  2. Gift the Property – disconnecting your legal right to the asset and then surviving 7 years to avoid any tax on your demise. The person receiving the gift has full control over the property and now have their own IHT exposure to manage. Gifting is not always popular in this region due to the lack of control so the patriarch prefers to retain control until their demise.
  3. Liquidity Solution – in simple terms an insurance policy that pays the death tax bill when, not if, it will happen. Insurance policies sit outside of the probate process and essentially create quick cash when you need it most thereby a cost-effective solution to protect the asset for future generations, allowing the patriarch to retain control throughout and satisfying the HMRC deadline.

Unfortunately, few foreign investors are aware of the revised legislation, the impact on their residential property portfolio and how to plan for it.

The UK Government, like others, is using aggressive tax legislation not only to recoup their tax coffers post-Covid but to uncover the property assets that may have been procured by nefarious means. Events in Europe are fast tracking new legislation and subsequent confiscations with more measures on the horizon.

For example, the UK Government intend to launch the ROE (Register of Offshore Entities) with the Land Registry soon. This will result in the UBO names, not their entities, becoming public record. Not all HNW will want their details in the public domain for a raft of reasons.

UK property, in particular London, as an attractive destination for foreign investors is now under question. With £35+ billion worth of London property held through BVI structures alone, there is plenty for HMRC to collect at 40 percent. For example, HMRC IHT takings increased 20 percent+ last year alone; foreign investors footing a good portion of that.

Investors should realise that the days of “getting around it” are over and don’t rely on legacy solutions since legislation change is constant.

7. Using crypto to pay for rent and buy UAE property is the biggest opportunity since Palm Jumeirah: expert

Benefits of crypto payments for the real estate industry.

Opening up the UAE real estate to crypto payments – including Bitcoin and Ethereum – could be the biggest change to the sector since the Palm Jumeirah was announced, an expert has said.

Recent moves by UAE property giants such as Nakheel and Damac have cemented the use of crypto for real estate transactions in the UAE.

For instance, Nakheel customers can now pay for their rent, service fees, and real estate purchases using cryptocurrency.

UAE real estate developer Damac Properties also revealed that it would begin accepting Bitcoin and Ethereum as payments for property purchased.

“We expect real estate company equity prices and property valuations which lag public equities to react very positively to this massive stimulus injection,” Christopher Flinos, the CEO of Hayvn, said.

UAE residents and investors will be able to pay their rent as well as buy houses using cryptocurrencies, the CEO of Hayvn confirmed, adding that the firm can do transaction sizes as small as AED 100.

Christopher Flinos, CEO of Hayvn talks about the use of crypto in real estate.
Christopher Flinos, CEO of Hayvn.

Commenting on whether such payments will attract first time home-owners to the UAE residential market, Flinos added: “Approximately 68 percent of cryptocurrency holders are under 30 years of age and together they comprise a market in excess of $1 trillion.

“The benefits of crypto payments include no cheques, no loans, no fees, no taxes, lower cost, and you can afford a better house for your family because you made lots of money trading in crypto.”

Hayvn Research also shows that in economies with volatile domestic currencies – defined as currencies that move more than 7.5 percent over a 12 month period – real estate prices are only 3.7 percent more volatile than in countries with more stable domestic currencies. The firm expects this to be true for cryptocurrencies, as well.

Sharing his thoughts on the challenges facing the adoption of such payments in real estate, Flinos said: “Consumers need to trust the system and that the payments process works. This can be overcome by working with regulated corporations. The UAE is a cryptocurrency hub and this move further cements this incredibly wise position taken by the leaders of this great nation.

“At Hayvn, we are humbled and honoured to be working with the UAE Government to further develop the society. And it has a number of regulatory hubs, including the leading ADGM regulatory centre where Hayvn is fully regulated.”

8. Nakheel accepts crypto payments for rent and real estate purchases in partnership with Hayvn

Nakheel customers can now pay for their rent, service fees, and real estate purchases using cryptocurrency, following an exclusive partnership between the Dubai property giant and Hayvn, which is a global institutional digital currency platform.

This is the first time a regulated UAE real estate cryptocurrency payment solution is in play, Hayvn said in a statement.

The CEO of Hayvn, Christopher Flinos, said: “Cryptocurrency is a $1.8 trillion asset class. When you open up a market to investors who together comprise $1.8 trillion, then you are going to see some investors switch out of crypto and into UAE real estate.

“This is the biggest change to UAE real estate since the Palm Jumeirah was announced. To be working with Nakheel, the original pioneer of Dubai real estate demonstrates the value of our ADGM regulated status.

This exclusive cryptocurrency agreement indicates the continuing evolution of real estate in the UAE. Nakheel’s projects in the UAE form an impressive portfolio of master communities as well as residential, retail, hospitality, and leisure developments.

Nakheel, a leading real estate player in the region is now accepting crypto as a mode of payment.

“To have such a major industry pioneer as a partner demonstrates the importance of Hayvn’s ADGM-regulated entity status. This association signifies why we strive to keep innovating, based on our commitment of building trust and maximising our digital currency financial offerings,” Flinos added.

Accepting cryptocurrency payments from customers supports the UAE’s drive to expand the cryptocurrency sector.

Following the Dubai government’s decision to provide virtual asset licenses under the Dubai Virtual Assets Regulatory Authority (VARA), this partnership between Nakheel and Hayvn further cements Dubai’s position as a global cryptocurrency hub.

Earlier this week, UAE real estate developer Damac Properties revealed that it would begin accepting Bitcoin and Ethereum as payments for property purchased.

Damac isn’t the first real estate group to accept cryptocurrency as payment. The company is part of a growing group that is accepting payments in virtual currencies.

In September 2017, one of Dubai’s largest real estate brokerages, fäm Properties, revealed that some landlords would start accepting Bitcoin payments for residential property rentals.

Outside real estate, some restaurants and other businesses, including startups have begun accepting cryptocurrencies as payment, as well.

9. Damac permits property buyers to pay in Bitcoin and Ethereum as crypto use in real estate picks up

Ali Sajwani, CEO of DAMAC talks about the importance of crypto in the future of real estate.

UAE’s Damac Properties will begin accepting Bitcoin and Ethereum as payments for property purchased.

Earlier, Damac Group said it would invest $100 million in building digital cities in the metaverse.

Damac isn’t the first real estate group to accept cryptocurrency as payment. The company is part of a growing group that is accepting payments in virtual currencies.

“This move towards customers holding cryptocurrency is one of our initiatives to accelerate the new economy for newer generations, and for the future of our industry,” Ali Sajwani (below), general manager of operations at Damac and lead of the organisation’s digital transformation initiatives.

“It is crucial for global businesses like ours to stay at the top of evolution. Offering yet another transactional mode is exciting, and we are glad to recognise the value this technology brings to our customers.”

Outside real estate, some restaurants and other businesses, including startups have begun accepting cryptocurrencies as payment. The UAE has been positioned itself at the forefront of the cryptocurrency craze, establishing designated accelerators and crypto-hubs, as well as introducing regulatory frameworks.

Watch this space for more about the latest real estate developments in the region.

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Leave a Reply