It is crucial to note that the UAE is not all about its Oil and Gas industry. This is often the assumption of people who are not too familiar with the country. However, this is far from the truth. According to the Khaleej Times, the contribution of the building and construction sector to the GDPA of the Emirates was 8.3%. This report was in 2018. Other industries like the retail and whole trade, financial, and manufacturing contributed 11.2%, 9.2%, and 8.9% respectively. Hence, it is evident that the non-oil sector of the country’s economy is on the rise. The nation is on course to deliver its vision to make other areas of the Emirates more prominent. According to the Minister of Economy, Sultan bin Saeed Al Mansouri, other industries are becoming more attractive to investors. However, the emergence of Coronavirus (COVID-19) disease has slowed down investment in property business across the globe. The pandemic is also affecting investment in various industries in the UAE currently. Nonetheless, experts expect many foreign investors to invest in the property market in Dubai immediately the pandemic is over. This prediction is because of the following reasons:

Governmental Policies

According to Knight Frank, a research firm, the federal government has put measures in place to support business activities. The federal government, through the UAE central bank, has provided an AED 100 billion stimulus package. This effort was made to ease regulations to help retail and corporate customers. The UAE central bank implores banks to use the fund to offer them temporary relief of up to half a year. Besides, the government is not relaxing in any way to ensure that the health of the citizens remains the priority. The country has numerous world standard healthcare facilities in place while enforcing social distancing to curb the spread of the disease. With adequate healthcare measures and governmental policies to sustain and promote the economy, experts predict that the UAE will be a viable destination for property investment once the pandemic comes to an end.

Improved Terms for Expats

According to Government.ae, on February 3, 2019, the government introduced a new system of visa for professionals and foreign investors in the UAE. This new system makes it possible for expats to be issued a permit for 5 to 10 years. Interestingly, it will be renewed automatically! Besides, this new system also makes it possible for them to enjoy full ownership of their business. Hence, expats can live, study, and work in the company without the aid of a national sponsor. According to Knight Frank, In the light of the pandemic, the provision of the government has increased the loan-to-value (LTV) ratio. This increase allows a first-time expert buyer to enjoy 65% to 70% for properties above AED 5 million and 75% to 80% for properties below AED 5 million. In the same vein, a first-time Emirati buyer will enjoy an increase in ratio from 70% to 75% for estates above AED 5 million and from 80% to 85% for properties below AED 5 million.  

Liberal Foreign Ownership Laws

Indian, Pakistani, British, and Saudis residential property buyers are quite common in the UAE. This prominence is as a result of the liberal foreign ownership laws of the country. Freehold properties are available in designated areas that foreign nationals can purchase in the Emirates. In 2014, the Abu Dhabi government made new laws that allow foreigners to own property on a freehold basis in specific areas. Previously, foreign nationals had restrictions limiting to leasehold arrangements with 99-year leases. Lifting this restriction is one of the many policies of the government to boost the property market of the nation. The government also made it mandatory in 2012 for all employees in the public sector to relocate with the border of the country.

Good Rental Yields

According to the Global Property Guide’s research, gross rental yield in Dubai is between 5.2% and 5.9%. This implies that the gross rental yield in UAE is worthwhile. Medium-sized apartments have yields averaging 5.19% while small-sized apartments have an average yield of 5.91%.  Small-sized apartments and medium-sized apartments in this context are 90 sq. m and 120 sq. m. respectively. Smaller apartments have a higher yield than medium-sized apartments because their cost per sq. m is lower. This pattern is somewhat strange, considering the fact that larger apartments are often cheaper per sq. m. in other major cities around the world. Hence, you have to think twice before choosing to either invest in a small-sized apartment or larger apartment in Dubai.

Pro-Landlord Rent Cap Laws

The government of the Emirates is doing all it can to make the property market investment attractive to foreign investors. One of the ways it is doing this is by making and implementing pro-landlord rent cap laws in the country. According to the Gulf Business, the government made new law in December 2013 that increased rent cap by 20%. The former was promptly abolished to implement the new law. The new law allows the landlords to increase rents on lease renewal. They can do this, especially when the rent for a property is less than the average market rental rate. This new decree also affects the Dubai International Financial Centre (DIFC), free zones, and special development areas. The new rule also makes it easier for landlords to evict defaulting tenants. Hence, being a landlord in Dubai is more convenient and lucrative than ever.

Conclusion

From the above points, it is evident that investing in the property market in the UAE is a no-brainer. Indeed, the pandemic has made brought investment plans to a pause in the meantime. However, experts predict that many foreign investors will look at investing in properties in the Emirates very soon. Therefore, it is crucial that make plans ahead to enjoy the dividends of investing wisely in the right place. For now, health remains a paramount topic all over the world. Therefore, I encourage you to stay safe and stay sane until we see the light at the end of the tunnel. In Lolia Real Estate we ensure that we exceed clients' expectations by matching their requirements whether it be for investments, for rent or for living, as we have a team of professional agents who can work with you on your requirements and provide the best recommendation. Hence, we provide high-quality services to our clients.