Is the Dubai Real Estate Market Destined for Collapse? Insights from Experts

In recent years, Dubai has emerged as a hotspot for international investors, including those from the United Kingdom, which confidently ranks among the top buyers of real estate in this market. However, with rising prices and global economic challenges, the question is: could the Dubai real estate market face a downturn? Opinions are divided; some express concerns about overheating and a potential “bubble,” while others remain optimistic about continued growth.

We spoke with Mira Real Estate, industry experts and organizers of the Dubai Property Expo London, about market trends and insights.

Real Estate “Bubble” Myths 

Among concerned market participants, there are rumours that such rapid growth cannot be sustained indefinitely. However, despite these fears, the facts reveal a more complex reality. According to Property Monitor, in July of last year, the volume of residential property transactions increased by 47% compared to the previous year, totalling 15,046 transactions, with off-plan projects still dominating.

Of course, not every property guarantees significant returns, as asserted by Mira Real Estate. The first factor influencing profitability is the investment strategy. Almost all properties under construction in Dubai can be resold after paying 30% of their value. However, to maximize profit, the entry threshold must be appropriate. 

Investors should consider properties in the super-luxury segment (typically starting from $3 million) or new master developments—large residential projects with complete infrastructure (prices generally begin at $8,000 per square meter). The construction of master developments takes 5 to 10 years, during which prices tend to rise. A successful case for a Mira client involved purchasing an apartment in The Opus residential complex by Omniyat for $800,000 (an exclusive project with a unique futuristic design). After just 10 months on resale, the investor realized a profit of +110%.

Rental Income as an Investment Model

Another investment model is renting out properties. In Dubai, rental income is tax-free; moreover, profits are received in dirhams—a stable currency pegged to the dollar. Luxury properties yield annual returns of 3-5%, while business-class properties can generate 8-10%. However, it is essential to consider the neighbourhood, construction quality, and management company (the experience of which affects the rental rate achievable). 

A case from Mira Real Estate illustrates this: in 2022, an investor purchased a studio apartment to obtain residency and subsequently rent it out. Today, renting such an apartment yields a 10% annual return (approximately $2,000 per month), and resale could provide the owner with at least a 29% profit.

Stability and Safety of the Dubai Market

Despite myths surrounding a potential crash, real data confirms the stability of Dubai’s market. In 2023, Dubai was recognized as one of the most stable economies globally and ranked among the top ten countries with the highest “soft power” according to Brand Finance. Economic stability, tax advantages, and stringent government regulations foster a high level of trust and asset protection. It is noteworthy that there are no taxes on income from property sales or rentals in the UAE, making investment in Dubai even more appealing for foreign investors.

High Quality of Life and Comfort for Residents

Dubai not only attracts investors but also appeals to those seeking a high quality of life. Its developed infrastructure, luxury restaurants, beaches, and premium services make the city attractive not only for investment but also for living. This ensures stable demand for housing and high rental yields.

Conclusion

Despite rumours of decline, Dubai’s real estate market remains one of the most stable and promising globally. A robust economy, tax incentives, large-scale projects, and a high standard of living position it as an ideal destination for long-term investments. Investors continue to reap impressive profits while the city garners increasing attention on the international stage.