Investing in UAE Real Estate: Two Most Popular Strategies

The UAE real estate market continues to grow. In 2024, more than 330 thousand transactions for almost 900 billion dirhams were finalized here. One of the reasons is the high interest from foreign investors who invest in residential and commercial projects in Dubai and other emirates. In the article we will cover the investment strategies most often used in the UAE real estate market and show examples of what returns they can bring.

The essence of the rental strategy is to buy apartment in Dubai that is being built in a promising area with high demand for real estate, and then rent it out. You won't have to look for tenants yourself, you can do it with the help of a management company. This option is available in many projects.

For example, consider buying an apartment in Ras Al Khaimah, Dubai Islands or Saadiyat Island - without the use of installments or mortgages, with full payment at the expense of the investor's own capital.

As of March 2025, a good one-bedroom apartment with a sea view in these locations costs about AED 2 million ($540,000). According to various forecasts, the cost of such an object will grow by about 15-25% per year. Thus, by the end of construction, in 3 years, it will rise in price to at least 3 million dirhams ($810,000).

When registering the property will have to pay the Dubai Land Department (DLD, Dubai Land Department) a one-time fee of 4% of the value of the apartment, that is, 80,000 dirhams ($21,600). If the apartment is sold before the transfer, the fee does not need to be paid.

When the project is completed, the apartment can be rented out. The rental cost can be around AED 1,000 ($270) per day, with occupancy rates of 60% to 90%.

Taking into account management costs (20% of the rent) and other service charges, the net annual income can be from AED 200,000, i.e. at least 10% per annum.

As a result, in 5 years the investor will receive:

Now let's consider the strategy of resale and reinvestment of income. For calculations, we will take the capital of 2 million dirhams ($540,000), as in the case of the previous strategy. However, we will use a 50/50 installment plan and buy the property for AED 4 million (about $1 million).

A good one bedroom apartment can be found in this budget. It will grow in price by the same 15% per year, and in 2-2.5 years of construction the cost will reach 5.3 million dirhams ($1.4 million).

DLD tax will not have to be paid, because the object will be resold before the transfer of ownership. However, it will be necessary to pay a commission to the agent - 2% of the value of the apartment.

As a result, the investor's profit for 2-2.5 years will amount to 1.2 million dirhams ($324,000). Together with the initial capital of 2 million dirhams, it can be reinvested in a three-room apartment (for example, in Nikki Beach or a similar project).

Here we will follow the same scheme - we will pay only 50% of the price of the second apartment, i.e. we will pay AED 3.2 million for an object worth AED 6.4 million. In two years its price will reach AED 8.5-8.6 million (about $2.3 million).

Thus, starting with a capital of AED 2 million, the investor will receive in 5 years:

Now let's compare the two strategies and find out which one is more profitable. Based on our calculations, an investor who invests AED 2 million in a rental property will get AED 1.3 million net profit in 5 years. In the case of resale and reinvestment, the return would be AED 3.1 million, which is 2.4 times more.

It turns out that resale brings higher profitability. That is why it is so popular among investors in the UAE.

However, when choosing a strategy, it is worth considering: not every project gives such a large increase. In order to earn the maximum on resale, it is important to get advice from specialists who know the market and can not only bring the investor into the project, but also profitably withdraw from it.

The strategies we have described in this article are not the only ones. Invest in real estate in the UAE can be different ways: for example, buy villas on the secondary market in premium locations, renovate and resell them. Or take land for resale or construction.

However, the two main strategies that most investors start with are renting and reselling apartments. The first allows you to get 60-70% return on invested capital for 5 years. The second can be more profitable and bring up to 100% in 3 years. But to achieve this, it is important to choose the right project.

If you need professional advice on buying or selling real estate in Dubai - talk with expert.