Investment Strategies For The United Arab Emirates

The United Arab Emirates offers a lucrative arena in which to invest in real estate. Following Dubai’s tradition, the other Emirates boast the same tax-free benefits and magnificent state-of–the-art constructions, while enormous demand continues to drive the property market in the UAE.

General Factors

Many of the United Arab Emirates are offering similar tax-free investment advantages and a wide ranging supply of real estate options for foreign buyers. For now, emirates such as Abu Dhabi, Sharjah, Umm al-Qaiwain and Fujairah offer comparatively low prices and, while demand is reaching peak levels, investors are acting now to benefit from these property markets, just as they did less than a decade ago in Dubai.

With a shortage of quality yet affordable property in Dubai, the rest of the UAE now seeks to address an ongoing shortage, chiefly amongst among expatriates and tourists, for accommodation and work premises to equal the luxury standards already set by Dubai. Hence, awe-inspiring architectural wonders are being created elsewhere in the Emirates and are set to boost the tourism, commercial and residential real estate markets.

The UAE now attracts record numbers of international jet-setters and investors alike. UAE tourism already accounts for 0.5% of worldwide tourism, while the tourist industry in the Emirates is forecasted to grow by some 4.9% per annum until 2017. A frenzy of related real estate activity is producing a vast array awe-inspiring hotel and resort developments to keep up with an un-sated demand for top quality properties.

Economic Factors

The UAE possesses one of the most highly developed and industrialised economies on the planet, as reflected in its GDP per capita, ranking 5th in the world and 3rd in the Middle East, after Qatar and Kuwait. The GDP growth rate in 2007 stood at 7.4%, while predictions from The Economist offer an average forecast for the period 2008 to 2012 of an average 7.6% p.a.

Detailed planning for economic growth was a strong feature of UAE government planning during 2006-2007, with the activation of initiatives such as Plan Abu Dhabi 2030 and the Dubai Strategic Plan 2007-2015 high on the agenda.

The UAE’s thriving economy, backed by highly favourable tax conditions and tax-free zones, makes it an ideal location for highly paid tax-free workers, all seeking accommodation to buy or rent. The oil industry has already attracted a surge of expatriates and foreign workers. As this sector of the population continues to grow, an ongoing demand exists for top quality commercial and residential property in the UAE. Construction is now the third largest industry in the UAE, after oil and trade.

Infrastructure programmes are constantly underway in order to maintain the quality of UAE services to the highest of international standards, indicating excellent prospects for overseas investors. A recent government report outlined that over 1,800 projects, worth around US$27 billion, are currently being carried on in the Gulf region.

Political Factors

Although each of the seven emirates maintains a high degree of independence, the UAE is globally governed by a Supreme Council of Rulers. This is made up of seven emirs who are responsible for appointing the prime minister and the cabinet.

Political parties do not exist in the UAE and an Arab nationalist feeling has developed. However, the youth of today is largely in favour of political liberalisation as this encourages further economic development in the UAE. A number of small clandestine, radical Arab or Islamic organisations exists but these are watched very closely by the UAE’s security services.

The UAE is an increasingly tolerant nation that highly values the contribution of the expatriate workers. Supporting Arab unity, the government is committed to providing a safe environment to all those who settle in the UAE, and continues to provide a peaceful location in which to holiday, live and work.

The UAE is a member of the following international organisations:

United Nations (UN)
International Monetary Fund (IMF)
Organisation of Petroleum Exporting Countries (OPEC)
World Trade Organisation (WTO)
Arab Gulf Cooperation Council (AGCC or GCC)

Natural Factors

The UAE’s natural facets include an abundance of sunshine, sandy beaches, sea and water sports, all combined with an intriguing cultural experience. In addition, a relaxed, high quality lifestyle of top-class restaurants, golf resorts and tax-free shopping continues to entice a growing influx of investors, expatriates and holidaymakers alike.

Geographic location allows the UAE to act as a connecting link, both physically and culturally, between Europe and the Indian sub-continent, the Far East and Africa.

An immense four fifths of the Emirates is composed of desert; however, they also offer a truly awe-inspiring spectacle of contrasting landscapes - sweeping sand dunes, fertile plains, rich oases with steep, rocky mountains and waterfalls, make the UAE a spectacular place to visit.

The climate in the UAE varies slightly from emirate to emirate but average winter temperatures can go down to 14°C in January and reach as high as 41°C in August. Many visitors avoid the worst of the summer heat between June and September. Rainfall is generally sparse and intermittent, falling mostly during February or March.

Traditional Arab hospitality and the country’s deep-rooted cultural heritage are firm attractions for visitors to the UAE and these are easily accessible in the Emirates’ many cultural centres. Traditional sports such as falconry, camel-racing and horse-racing are also great attractions for tourists.

As one of the most liberal countries in the Gulf, other cultures and beliefs are generally tolerated provided, that is, that visitors also respect the native Arab culture of the emirate they are visiting. English is widely spoken as a common international language within professional circles.

An abundance of sightseeing opportunities exists in the UAE, from cultural monuments to natural and man-made wonders, adding to the UAE’s great appeal as a relocation and holiday destination. Sights such as Dubai’s Arabian oryx, the Al Maha wildlife resort, and Wild Wadi Park with its adventure theme park are just some of the more natural attractions that await tourists.

Logistical Factors

The national airlines, Etihad Airways ( and Emirates (, serve the UAE’s six international airports at Abu Dhabi, Al Ain, Dubai, Sharjah, Ra's al-Khaimah and Fujairah. The seventh, Dubai World Central, is under construction and expected to be complete by 2017.

Abu Dhabi International Airport (AUH)

(02 5757500, flight enquiries: 02 5757611)
Web address:

Al Ain International Airport (AAN)

(03 785 5555)

Dubai Airport (DXB)

(04 2245555, flight enquiries: 04 2066666)

Sharjah International Airport (SHJ)

(06 5581111, enquiries: 06 5581000)

Ra’s al-Khaimah International Airport (RKT)

(07 2448111)

Fujairah International Airport

(09 2226222)

Average flight times:

London to Abu Dhabi - 6 hours 35 minutes
London to Dubai - around 7 hours
Frankfurt to Dubai - 6 hours
Hong King to Dubai - 8 hours
Los Angeles to Dubai - 19 hours 55 minutes
Toronto to Dubai - 14 hours 10 minutes
Sydney to Dubai - 16 hours 15 minutes
Nairobi to Dubai – 4 hours

Departure tax is not charged at any of the UAE’s airports.

Airport expansion and construction is well underway in the Emirates in readiness for the increasing numbers of visitors to the UAE. Airports such as Dubai’s International Airport along with Abu Dhabi, Ajman and Ras Al Khaimah airports are all undergoing upgrades to offer full luxury and efficiency while supporting the UAE’s expanding international business and leisure tourism sectors.

Abu Dhabi Airports Company (ADAC) is to spend US$8.16 billion on a redevelopment programme for the Abu Dhabi International Airport. The programme is to build a new air traffic control complex at the airport, including a five-storey technical and support building integrated with the 110-m high visual control tower.

A second airport in Dubai, The Dubai World Central International Airport, is also currently under construction in the Jebel Ali district south of ‘central’ Dubai, previously known as the Jebel Ali International Airport. While the airport is initially scheduled primarily to handle cargo, upon completion it will become the biggest passenger airport in the country – indeed, the biggest airport of any kind on the face of the planet, covering 140km², featuring six runways and with an annual capacity of 120 million passengers and 12 million tons of cargo.

Ras Al Khaimah International Airport is upgrading its cargo and passenger services to the Middle East, North and East Africa, Central Asia, India and the Far East. An Open Skies policy allows it offer competitive prices, while operating 24 hours a day, without restrictions. Additionally, this forward-thinking emirate is developing a USD 265 million commercial spaceport for the purposes of space travel.

Short Term Investment Strategy

Key Opportunity

Following on from Dubai’s phenomenal success, the other Arab emirates are now following suit, each with their own economic attributes but similar tax-free investment advantages to Dubai. For now, lower prices, a strong infrastructure and overwhelming demand for commercial and residential properties are driving the success of the real estate markets in other emirates such as Abu Dhabi, Sharjah, Umm al-Qaiwain and Fujairah and these emirates are attracting a steady flow of fresh investment.

The UAE attracts a large number of affluent expatriates and foreign workers who wish to take advantage of its comparatively low cost of living and tax-free business and residency incentives. Today this group alone makes up more than 75% of the population.

In addition to a booming oil based economy, the UAE’s commercial and financial environments are hugely successful. Not to be forgotten is the fact that the UAE is one of the world’s fastest growing tourist destinations: luxury, state-of-the art holiday resorts and facilities are being built across the emirates to complement natural attributes of sun, sea and sand in abundance, giving the UAE all-round appeal as a truly multi-faceted destination. The UAE now attracts record numbers of international jet-setters and investors alike, accounting for 0.5% of worldwide tourism, while the tourist industry in the Emirates is forecasted to grow by some 4.9% per annum until 2017. A frenzy of related real estate activity is producing a vast array awe-inspiring hotel and resort developments to supply an unprecedented demand for property.

It is clear that the other United Arab Emirates are now offering similar investment potential to Dubai in its heyday, while prices, for now, remain substantially lower. This situation is changing by the day and early investors expect to continue to see rocketing growth from their investments in the short to medium term.


Investors in UAE off-plan developments factor in between 18 and 24 months for construction from reservation to completion stages. Short term investors normally look to profit from a carefully selected, promising market, selling on their unit to mid or long term investors approximately 14 to18 months after making their initial reservation, regardless of whether or not the project is yet completed.

Payment terms will vary depending upon the emirate; some projects in Dubai will often offer terms of 10% deposit with the balance payable upon completion, while other emirates demand around 20-40% of the purchase price. This allows short term investors to operate their strategy with minimum capital outlay. Of course, the earlier the investment is made, the greater the investment returns. As importantly by entering the project at the earliest possible stage, investors get the best choice of units which will always be first to attract buyers in the future.

Level of Complexity

Short term strategies offer the lowest level of complexity as the purchase has not yet been officially made, therefore, no property taxes or maintenance or management charges are due. This is a simple capital investment, often with no need to proceed to Purchase Contract, or make any mortgage finance arrangements. Remember to check with the developer if there are any charges made to “flip”, or reassign your contract, and at what stage you are permitted to do so, before you proceed.

Risk Assessment

All investors must carefully assess the particular project and units in which they wish to invest. In many cases a wide range of other projects will be under construction and a choice will need to be made. A decision will need to be based on how a particular development or project will outshine its competitors in terms of appearance, location, on-site facilities and the unit itself. Investors will also need to consider issues such as the number of other units available within the particular development, predicted demand as well as competition for the type of property they wish to invest in.

To curb risk, a short-term investor should normally seek to buy the best possible unit, ie. a corner unit, a penthouse or ground floor unit with a private garden, which will always sell in preference to a standard first floor unit.

Investors need to be clear how their exit strategy is to run. How will the unit be marketed and by whom? How much will the selling agents charge in commission? Should a buyer not be found prior to completion of the property, investors must be confident they can cover payment to completion of the unit and adapt their strategy if necessary.

Short term “flip” investments are undoubtedly more risky than longer term strategies, but, with careful research and planning in place, off-plan purchase in well located Dubai projects offers a sound investment with lucrative returns.

Law no. 8

Until now, there has been some doubt amongst investors about which UAE developers to purchase with, but the implementation of the new property law no. 8 is set to increase transparency in the real estate industry, regulating developers’ professional conduct and ensuring late delivery and broken promises are things of the past. The law means that anyone purchasing an off-plan property in the Emirates will make payments to Land Department- approved banks, rather than directly to the developer.

Developers will not be permitted to access the funds until certain agreed stages of construction have been completed and verified as conforming by a project consultant. This new law will help to encourage greater investment throughout the UAE, especially from those purchasers who have been reluctant, until now, to invest in an unregulated market place.


Following Dubai’s footsteps, property prices are now poised to soar in many of the UAE’s other emirates. For example, land prices in Abu Dhabi this year have already risen by 75%, according to HSBC Middle East. A spokesman for the bank has said, "We estimate that average residential real estate prices will increase by a further 20-25% over the remainder of 2008, with a total of more than 100% for the whole of 2008, and by 15-20% in 2009".

Indeed capital growth across the emirates is predicted to average 20-40% per annum. This growth is expected to continue in the UAE for some years to come as land costs are continuously driven upwards.

With influential investors such as Donald Trump and large multinational corporations backing UAE property, the outlook for the stability of the real estate market is certainly promising. Currently one of the earliest of Dubai’s projects is coming on stream and the first properties on Jumeirah Palm are changing hands with outstanding returns of 120% per annum for the original investors in apartments on the island and 200% for villas located on the palm “Fronds” of The Palms.

While spectacular returns have been characteristic of the Dubai property market over the past decade, the shortage of property to rent or buy means prices have driven dramatically. As more projects near completion, and properties become available, the rate of return on properties will eventually level out and slow down. This makes way for opportunities for higher growth and lower entry prices within the emerging markets now triggering the other emirates.


The short term investment strategy is purely based on capital outlay as mortgages cannot generally be raised against property that is not yet built. In order to cover all eventualities, investors MUST be confident they can complete the purchase if necessary, even if using a buy to flip strategy.


The tax-free regime of the UAE is one of the factors that make it such a highly cost-effective place in which to invest, live and work.

While enjoying the benefits of Dubai’s tax-free environment it could be easy to overlook tax matters in your home country and a clear understanding of your personal tax implications is essential before taking the final step of a property purchase in the UAE.

Medium to Long Term Investment Strategy

Key Opportunity

Many UAE investors are inspired by the phenomenal success of Dubai over the past decade. While property investment market is still strong in Dubai for medium to long term investors, prices are reaching peak levels and property and land are now in short supply. The other Emirates seek to emulate this success, helping to take the load off the un-sated demand for property in Dubai. Consequentially, ambitious tourism and commercial projects are now underway to accommodate an ever-growing influx of foreign business and tourism activity across the Emirates, while a need for homes to support this activity has never been stronger.

UAE tourism is one of the fastest growing tourist industries in the world and estimates indicate growth of some 4.9% per annum until 2017. Timely investors are purchasing now, while prices are still low and projected growth is high, particularly in emirates such as Abu Dhabi, Ras al-Khaimah and Ajman as well as Sharjah and Umm al-Qaiwain.

A robust rental market is bolstered by the fact that a number of overseas companies, most of which are based in the Emirates’ many tax free zones, offer packages to their employees, including a rental home. Apart from residential and commercial rentals, the growing tourist industry puts further pressure on this market. These factors, combined with a general shortage of suitable properties, help keep investment in UAE property a highly lucrative option.


Average construction time on UAE off-plan developments, from project sales release to completion of construction, is approximately one year. Mid to long term investors look to hold onto their units after construction, normally for at least 18 months from initial reservation, either to rent it out and/or benefit from capital appreciation upon eventual resale. Many long term investors use the UAE’s most popular up-and-coming locations to generate significant and reliable rental income over a period of time as sustained rental returns are their main focus, followed by capital appreciation over time.

Capital appreciation is expected to perform exceptionally well over the next decade and the longer investors are able to leave capital in their purchase, the higher their potential long term returns will be. High tourist numbers and the resulting strength in the buy-to-let market allows investors to reap in solid capital growth from their properties, all the while supplementing this income with high rental yields in key tourist locations.

Level of Complexity

In the case of off-plan purchase, full payment for the property needs to be completed at various stages of construction, prior to final completion of the purchase.

For mid to long term investors in the UAE, a tax-free transaction brings with it minimum costs (2.4% stamp duty; 1.5% land registry fee; and 1-8% transfer of off-plan contract cost). In addition, you will need to factor in the costs of raising a mortgage and ongoing costs such as maintenance, community and utility bills. Bear in mind it’s advisable to open a local bank account in the emirate in which you are buying in order to pay for the property’s utilities and other ongoing expenses.

Beneficial arrangements are often to be made with local property management and rental companies that are usually conveniently based on or near the site. These ensure that such ongoing costs are covered and that your unit is rented out regularly. Managed properly, maintaining a property abroad can become no more complex than an investment closer to home.

Key Risks

A medium to long term investment strategy entails much lower financial risk than a short term plan which relies on finding a buyer within a very short time frame. Provided the right investment is made on a quality, well located project with multiple facilities, establishing a rental market and eventually a buyer for your investment should not be difficult. However, as with any investment, patience and money is sometimes required until the end user is found.

The UAE’s economic and demographic growth gives rise to phenomenal investment potential in what is now Western Asia’s key commercial, financial and tourism hub.
On the one hand, intense growth of course translates to a stable environment in which to buy or rent, but brings with it intensified competition on the other.

Although escrow funds do not exist in the UAE, the government has formulated a scheme to prevent the developer from overspending on the money invested for off-plan properties. Developers must pay 50% of the purchase price of each unit into a bond that guarantees the completion of the development. Buyers are therefore well protected in the unlikely event that the developer should go bankrupt or doesn’t complete on his contract.

By appointing independent legal representation, the client can be sure that all the necessary paperwork is in place before signing the purchase contract.

Property ownership for foreigners in the UAE is mostly sold Freehold, leaving no room for ownership disputes.


Property prices and rental values are now poised to soar due to enormous demand for property in the UAE as a whole. For example, land prices in Abu Dhabi this year have already risen by 75%, according to HSBC Middle East, and timely investors similarly expect to witness rapid and substantial returns as property demand, land and construction costs all continue to spiral ever upwards.

Capital growth throughout the emirates is predicted to average some 20-40% per annum depending upon the emirate and, in the light of a young market with strong economic growth, investors expect returns to continue to be high in the UAE for some years to come. EFG-Hermes confirms, "We estimate that average residential real estate prices will increase by a further 20-25% over the remainder of 2008, with a total of more than 100% for the whole of 2008, and by 15-20% in 2009".

As is invariably the case in growing tourist and commercial property markets, rental yields are strong where demand is high. Despite widespread construction, a shortfall in supply still exists, particularly in Dubai. A growing supply of property is emerging in the other emirates to take up this demand, and rental accommodation both in the commercial and residential sectors now offers potential for strong returns. Buy-to-let investors in the UAE are able to enjoy very lucrative yields of an average 6-10% to add to their already high eventual capital growth figures.


Mortgages are now widely available from most banks and some financial institutions in the UAE, with interest rates currently at 6% from HSBC. You can borrow for property purchase or buy-to-let investment and the lending criteria will vary from one lender to another. In general, purchasers can expect to get 80% mortgage on the value of the property if they are residents and 70% if they are non-residents. The mortgage term can run for 20 years, but must be paid by your 60th birthday.

Borrowers must select between conventional mortgages and Islamic mortgages. 70% of Islamic mortgages are, interestingly enough, granted to non-Muslims who benefit from the fact that there is no charge for early repayment of the loan.

Off-plan developments in the UAE offer installment plans over between 12 to 60 months. The charges applicable vary according to developer and repayments are usually index linked. The developer can sometimes offer the most competitive finance options and these are certainly worth considering in conjunction with mortgage alternatives.

Equity release is also a popular means of releasing some cash from the home without having to sell up and move house. If you have property in your own country and would like to borrow against this in an equity release plan, we can introduce you to independent financial advisors who can help you raise the necessary finance for your investment in the UAE. Such schemes can be helpful in certain circumstances to raise money for a mortgage to finance your UAE property investment.

As always, before making a commitment, we recommend you discuss your investment strategy with a lawyer, a reputable property agent with experience in the area and even a financial advisor.


The tax-free regime of the UAE is a highly appealing advantage to investors. It is a clear sign of the Emirati government’s intent to encourage foreign investment activity to further boost its booming economy.

While enjoying the benefits of the UAE’s tax-free environment, it could be easy to overlook tax matters in your home country and a clear understanding of your personal tax implications is essential before taking the final step of a property purchase in the UAE.

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