Should you Invest in Dubai’s Luxury Market?

Ever since the great recession, we’ve seen a shift in the global economic landscape. More specifically, emerging economies in the Middle East have begun to diversify and deliver more sustainable growth, while more established entities have struggled to maintain a long-term recovery.

This has made emerging market investment opportunities increasingly appealing to traders from across the globe, with associated currencies, stocks and commodities being adopted on a significant scale.

Forex trading enthusiasts will note that the UAE Dirham has declined in line with the U.S. Dollar of late, however, while other investment opportunities have taken centre stage in cities such as Dubai. Prime real estate investment offers a relevant case in point, and below we’ll ask whether this remains a viable option in 2018.

A Look at Dubai’s Prime Real Estate Market

For many, luxury real estate investment represents one of the costliest and risk-laden options in the current climate. Part of this is due to the inflated prices of luxury property in cities such as London and Singapore, while the universal costs associated with purchasing and holding real estate can also detract from the attractiveness of the underlying asset.

These issues are not as prominent in Dubai, however, where prime real estate remains a relatively untapped marketplace. In fact, luxury transactions account for just 3% of Dubai real estate sales overall, and this significant lack of demand has helped to cap prices and generate significant value for overseas investors.

This is borne out by international comparisons, with luxury properties in Dubai around 40% cheaper than those available in Singapore. They’re also half the price of high-end homes in Paris and Moscow, and significantly cheaper than properties in London.

The fees associated with buying and selling prime real estate in Dubai are also noticeably cheaper, thanks to a nominal tax regime that has helped to minimise investment costs. In fact, these affiliated costs are around 32% in Dubai than they are in Hong Kong, which in turn optimises the long-term profitability of investments and the potential yield of real estate.

The Last Word

While real estate investment may not be everyone’s cup of tea (particularly in the current climate), each individual marketplace must be considered on its own merits. In the case of prime properties in Dubai, the real-time marketplace certainly makes a compelling argument for investment, with reduced fees and competitive valuations optimising the profits available to investors.

This window of opportunity may not exist indefinitely, of course, and as demand increases so too will the cost of prime real estate in Dubai. As a result, interested parties should consider their options sooner rather than later and determine whether or not such an asset class is right for them.

Should you Invest in Dubai's Luxury Market?

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