The emirate of Dubai is currently experiencing a remarkable real estate boom that is attracting investors from all over the world and promising exceptional returns – without questioning the origin of the money too closely. German investors are also benefiting from the lucrative opportunities offered by this market. One example of this is a young entrepreneur from Germany who spends half the year in his tranquil hometown in Lower Saxony and enjoys the winter months in glamorous Dubai. He is particularly fond of the famous Palm Island, where he regularly rents vacation homes. “Dubai is simply an incredibly exciting place,” he enthuses. Although he would like to move there permanently, his two cats keep him in Germany. But it’s not just the luxurious lifestyle that attracts him – Dubai also offers immense business opportunities. After selling his start-up, he invested in a three-bedroom apartment in Jumeirah Village Circle, which now yields him an annual return of nine percent. He now owns ten properties in Dubai. For the past four years, the real estate market in Dubai has only known one direction: upwards. While the real estate market in Germany is stagnating due to rising interest rates, prices in Dubai are reaching new highs. An expert from JLL reports a 21 percent increase in purchase prices and rents compared to the previous year. For example, a villa in Dubai Hills Estate, which was purchased for around 1.3 million euros in 2019, recently changed hands for over three million euros – an increase in value of 132 percent. Another expert emphasizes that real estate in Dubai is primarily used for speculation. Many projects change hands several times before completion, and yet the latest buyers often achieve annual rental yields of over ten percent. These enticing prospects attract investors from all over the world. In February, hundreds of buyers gathered to purchase luxury villas on the Dubai Islands, which were sold out within a few hours. In 2023 alone, properties worth almost 160 billion euros changed hands in Dubai, and experts expect this trend to continue. The boom is also reflected in construction activity: new high-rise apartment blocks are being built near Palm Island, and luxurious residential areas are springing up in the desert. Despite the extreme climatic conditions, more and more people are being drawn to Dubai. At the end of 2023, around 3.65 million people lived in the emirate, and according to forecasts, the population could double to 7.8 million in the next 15 years. Low taxes are a major incentive for people to move to Dubai. There is no income tax for private individuals, and VAT is only five percent. Companies also benefit from a low tax burden. Geopolitical crises are also contributing to the boom: Since the outbreak of the war in Ukraine, many Russians have moved to Dubai to escape the sanctions, and Chinese investors are also looking for a safe haven in the emirate. A German real estate agent, who now lives in Dubai and works as a project developer, is optimistic. “Every successful investor now goes to Dubai,” he says, emphasizing the transparency of the market. Transaction histories and rental trends can be viewed by anyone, and properties can even be paid for by credit card. However, buying real estate remains a challenge for foreign investors, as German banks do not finance real estate in Dubai and the banks in the emirate are also strict when it comes to granting loans. Another example is the young entrepreneur from Lower Saxony who, after selling his start-up, invested in “off-plan” properties – projects that are still under construction. Buyers of such properties are protected by strict regulations, and the real estate industry in Dubai has learned from past mistakes. Despite some risks, the high rental yields and the prospect of value appreciation continue to attract investors to Dubai. Projects such as the three by three kilometer Damac Hills 2 in the desert or floating villas off the World Islands show that the real estate boom in Dubai is far from over. Experts agree: the upturn will continue.
How to make money from the Dubai real estate boom
