Dubai real estate: Low-risk investment hub with strong FDI growth

Khaleej Times

a day ago

Dubai's real estate market will continue to attract significant foreign direct investment (FDI), reinforcing its status as a global investment hub due to its business-friendly policies such as long-term visas, zero income tax, and the Dubai Real Estate Strategy 2033, which enhances transparency and investor confidence.
Referring to latest data, leading executives and experts said 2024 set a strong precedent with Dh52.3 billion ($14.2 billion) in total FDI, of which real estate accounted for 14%, equating to approximately $2 billion.
The property sector recorded 217,000 investments valued at Dh526 billion in 2024, with 110,000 new investors, a 55% increase. In 2025, an expected 182,000 new housing units and sustainable developments like Dubai South and Dubai Creek Harbour are likely to sustain this momentum.
'Government initiatives, such as the Dubai 2040 Urban Master Plan and relaxed visa rules, further bolster demand for residential and commercial properties. Dubai's diversified economy and strategic location ensure its real estate market remains a magnet for global investors, with FDI expected to grow steadily in 2025,' according to the experts.
Attracting Foreign Buyers
Engineer Amer Khansaheb, Chief Executive Officer and Board Member, Union Properties, said the UAE real estate market is undergoing a significant transformation, evolving into a more institutionalised, globally competitive ecosystem that is attracting foreign and local buyers who are increasingly seeking long-term value. 'The real estate transactions across five emirates exceeded Dh239 billion in first quarter of 2025, reflecting the momentum and resilience of this sector. This robust performance further fortifies the UAE's continued presence as a global investment hub,' Khansaheb told BTR.
'What's particularly notable is the qualitative shift in demand. Developers are no longer solely building for speculative buyers. Instead, there is a growing interest from end-users, institutional investors, and long-term residents. This shift is creating demand for well-integrated mixed-use developments, high-quality community areas, prime location, and waterfront properties.'
Furthermore, he said infrastructure enhancements are also playing a pivotal role. The new Blue Line Metro, for instance, has already led to an average 23% increase in rents across nine communities set to be connected by the new line, underscoring how transit-oriented developments are driving investments.
'We can now observe a healthy stabilisation in the Dubai real estate market. In January 2025, Dubai real estate saw a modest decline of 0.57% in prices, the first since mid-2022, according to Property Monitor. This signals a healthy market where supply is beginning to align more closely with demand, offering greater opportunities for both buyers and developers in high-potential zones.
"Looking ahead, we see continued growth over the next years, driven by strategic infrastructure and an investor-friendly regulatory environment. As developers, our focus will remain on delivering well-located, thoughtfully planned, sustainable communities that cater to the evolving needs of our customers."
Promising Outlook
Mario Volpi, Head of Brokers at NOVVI Properties, said outlook for Dubai's real estate market remains promising on rising demand, new product launches and resilient UAE economy. In the second half of 2025, he said the market is expected to maintain steady growth, driven by continued population inflows, new project launches, and a maturing investor base.
'We're likely to see more emphasis on sustainable and smart developments, along with a shift in buyer preference towards ready properties due to rising rents. Off-plan sales will remain active, but end-users and investors are becoming more selective. With the UAE's stable economy, evolving visa reforms, and global appeal, Dubai will continue positioning itself as a long-term, low-risk investment destination,' Volpi told BTR.
In reply to a question about growth driver, he said international investors looking at the UAE market should consider several key factors.
First, he said the UAE offers a tax-efficient environment with no income tax on property earnings, which enhances net returns. Second, the country's political stability and investor-friendly regulations provide long-term security.
'It's also important to evaluate the type of property — off-plan versus ready to move — and location, as areas with high rental yields and infrastructure growth offer better returns. Additionally, understanding service charges, ownership laws, and currency implications is crucial. The UAE's flexible visa options linked to real estate investment further enhance its appeal for global buyers,' he said.
"One of the most pressing challenges we face today is affordability, particularly in the mid-income segment," according to Khansaheb. 'Although the high-end segments remain buoyant, many residents in the mid-income bracket struggle to transition from renting to homeownership. This is a critical gap that must be addressed to ensure long-term market sustainability,' he said.
'At Union Properties, we are actively working to bridge this divide by focusing on developments that deliver both quality and affordability. The concept of 'affordable luxury' is central to our approach, allowing us to offer well-designed, high-quality homes that are accessible to a broader range of residents. This balance is essential for remaining competitive and inclusive in a market like Dubai.'
In addition to affordability, he said financing remains a significant constraint. 'Many residents are willing and ready to buy, but high down payments, strict debt-to-income (DTI) ratios, and limited mortgage flexibility often stand in the way. Addressing this requires strong collaboration between banks and developers, particularly on developer-backed financing or longer payment plans.'
Another key challenge is the risk of overbuilding in already dense urban areas. As prime plots become scarcer, developers face pressure on margins and must take a more data-driven approach and planning. Moving forward, he said the emphasis must be on smart, demand-led development, ensuring that supply aligns with genuine market needs. 'Ultimately, the way forward lies in creating a more inclusive and data-informed real estate environment, where affordability, financing accessibility, and sustainable urban planning are equally prioritised.'
Khansaheb said there is a need to develop long-term mortgage market in the UAE as long-term expats and end-users are considering homeownership in the emirate. 'While it is true that long-term property ownership has traditionally seemed out of reach for many expatriates in the UAE, we are witnessing a gradual shift in both perception and behaviour. Increasingly, long-term expats are considering homeownership, encouraged by the UAE's world-class infrastructure, safe environments, and progressive residency reforms such as the 10-year golden visa. These developments have enhanced confidence and created a stronger sense of permanence among residents,' he said.
That said, homeownership remains a challenge, particularly for middle-income earners. The issue is not only the cost of property, but also the accessibility and financing structure. Most expats are required to make substantial down payments, in addition to covering upfront costs such as registration fees, commissions, and bank charges.
'These financial barriers often delay or completely deter potential buyers. Furthermore, most mortgage offerings in the market come with relatively short fixed-rate periods, making long-term financial planning more difficult for families looking to settle in the UAE.
'At Union Properties, we recognise these challenges and are actively working to provide more accessible paths to ownership. By providing solutions such as structured post-handover plans, flexible payment schemes aligned with salary cycles, and partnerships with banks to streamline approval processes for salaried expats, we aim to reduce these entry barriers.
'For example, with our Takaya project in Motor City, we have introduced a flexible 60/40 payment plan. This allows buyers to manage their finances more comfortably while securing quality property in a well-connected community. Our goal is to make homeownership not just an aspiration, but a realistic and achievable option, especially for the mid-income families who have chosen to make the UAE their long-term home,' Khansaheb said.