In recent decades, Dubai has become one of the most sought-after destinations for real estate investment globally. The city’s ever-evolving infrastructure, booming economy, and favourable business environment have made it a hub for foreign investors seeking to purchase prime properties in international markets.
Various industry reports have pointed to a notable increase in Dubai’s property prices over the past year or so. While the recent increase in prices is modest compared to pre-pandemic levels, it is still significant given the challenging economic climate globally. Despite that, Dubai’s real estate market remains among the most affordable when compared to other global cities such as London, New York, Paris, Hong Kong, Singapore and Sydney.
The UAE boasts a remarkably high GDP per capita, indicating the purchasing power of its residents. In 2022, the GDP per capita in the UAE exceeded $51,000, and is expected to surpass $58,800 by 2028. Comparatively, the GDP per capita in the UK was just over $10,000 in 2022. Despite this five-fold difference, the average housing prices in Dubai remain considerably lower than in other global cities including those in London. This disparity in economic and housing markets presents a unique advantage for homebuyers searching for exceptional affordability in Dubai.
However, whether property prices in Dubai are high for the average homebuyer depends on individual circumstances and financial capacity.
Demographics of the average homebuyer in Dubai
The demographic profile of the average homebuyer in Dubai varies widely, as Dubai is a multicultural city that attracts people from all over the world.
In terms of individual circumstances, many homebuyers in Dubai are expats who have been living and working in the UAE for several years and have stable employment. There are also local Emirati buyers who are looking to invest in real estate as a means of building generational wealth.
When it comes to financial capacity, Dubai’s real estate market caters to a range of budgets, with properties available at various price points. The average homebuyer in Dubai tends to have a higher income and purchasing power than in other global cities, although affordable housing options are also available.
Many potential buyers often wonder how Dubai’s real estate market compares to other major cities worldwide in terms of affordability. Are Dubai’s properties a bargain compared to key global cities?
Six times cheaper than Hong Kong or London
A Knight Frank report shows that Dubai’s prime residential properties cost an average of $680 per square foot, while Hong Kong and London average at $4,400 and $3,900 respectively. In other words, it would cost a homebuyer nearly six times more to purchase a prime residential property in Hong Kong or London than in Dubai. This makes Dubai an attractive destination for foreign investors looking for affordable properties with excellent ROI.
Four times cheaper than Paris
While Dubai’s real estate prices may seem expensive compared to other cities within the Middle East, they remain relatively affordable when compared to other global cities. According to a report by Global Property Guide, the average price of a 120 square metre apartment in Paris is approximately $1.4 million, compared to $354,000 in Dubai. This means that home prices in Paris are currently about four times more expensive than in Dubai when comparing the cost per square metre.
From tourists to homebuyers
The influx of tourists has driven up demand for real estate in Dubai, leading to price appreciation. The UAE government is continuously making efforts to diversify its economy through massive infrastructural initiatives such as the transformation of Expo 2020 Dubai into Expo City Dubai, and the completion of Palm Jebel Ali, which have boosted investor confidence in Dubai’s real estate market. Dubai’s real estate market remains a hotbed for investment opportunities, attracting both investors seeking to profit from tourism through renting out their properties, and tourists who have fallen in love with the city and choose to relocate or invest.
A foreign investor’s dream for prime real estate
Demand from foreign investors is another contributing factor driving real estate activity in Dubai. The city’s favourable business environment, tax incentives, safety and high-quality lifestyle have made it an attractive destination for foreign investors. Dubai’s strategic location between Asia, Europe, and Africa also makes it an ideal place for global business operations.
An investor’s ticket to one of the world’s highest ROIs
In addition to affordability, purchasing a property in Dubai can provide homebuyers with significant ROI. According to Bayut.com, the average rental yield for a studio apartment in Dubai ranges from 7 percent to 10 percent, while a one-bedroom apartment yields up to 8 percent. Compared to other global cities such as London or New York where rental yields average around 3 percent, Dubai’s real estate market offers homebuyers excellent returns on their investment.
Abundance of mortgage options
Financing homes through mortgages is comparatively affordable in Dubai. According to a report by Property Finder, the average mortgage rate in Dubai is 2.99 percent, lower than the global average of 3.03 percent. This means that potential homebuyers can finance their properties at lower costs, making it easier to invest in prime real estate.
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