Should You Buy Property in Dubai Now or Wait? A Valuer’s Perspective

As Valuers in the residential market, we are often asked whether now is the right time to buy. The answer is seldom one-dimensional and depends on a multitude of factors, including intended hold period, alternative options for investment of the funds, and whether the property will be your home or a buy-to-let investment.

 

Let’s start with the hold period; the Dubai market witnessed a period of huge growth following the pandemic. This is thanks to the perennial ‘save haven’ badge that Dubai wears proudly, along with Government initiatives to increase the ease of doing business, long-term visa options, and attractive personal and corporate taxation policies. As evident in our quarterly report, the broad market direction has been one of normalisation over the past quarters, as demand, supply and price point began to converge to stabilise the market. Buyers looking to quickly buy and sell the same asset for profit always carry risk in their strategy and the opportunity for ‘flips’ has reduced as market stabilisation becomes reality. Buyers with a longer-term view typically do well, adopting a ‘time in the market’ rather than ‘timing the market’ strategy. 

Stabilised markets typically grow more slowly, and predictably, creating reliable capital growth over time, and are seen in more mature markets. Dubai, and the UAE, however, enjoys a growing population and the Government certainly has many options available to further increase the attraction of migration to its shores and increase demand for real estate.

 

Dubai has worked hard to increase the ‘stickiness’ of its residents and this is evident in the number of end-users buying homes, school enrolments, and the inauguration of some of the best regional schools in recent times. Those ‘sticky’ residents are invested in Dubai, via family, schools, friends and of course real estate - and stick they will.

 

Buy-to-let investment in Dubai has always been an important sector of the market, due to relatively high yields, zero taxation on income and no capital gains tax. Rental stock is important for residents who are yet to 'stick' or choose to park investment funds in other vehicles, which may offer higher returns, but are generally higher risk owing to liquidity and the associated volatility in reaction to real-world events. This was evident in the equities markets early in the conflict.

 

For those on the fence as to whether now is a good time to buy, consider that Dubai competes on the international circuit across many demographics and a quick look across to the competition still places Dubai real estate as a good value proposition.

Conflicts accelerate decision making, whether in business, life or career. Those on the verge of selling, will sell, and those over-leveraged will follow suit. There will be distressed sellers and those deals will quickly be scooped up by those patiently waiting on the sidelines for an opportunity, then business as usual returns. Similarly, those on the verge of returning to their home country may accelerate plans. 

 

The Dubai market has strong fundamentals, the country has spectacular and growing infrastructure, and the market will continue to prosper.

 

Should you buy a house now? Ask yourself the questions - am I trying to time the market, or buy a home for the foreseeable future? The former comes with greater risk; the latter is a long-term investment for your family.