United Arab Emirates: Overview
In Depth
- Overview
- Price History
- Rental Yields
- Taxes and Costs
- Tax on Rent (Example)
- Buying Guide
- Landlord and Tenant
- Inheritance
- Living There
- Useful Links
- Country Statistics
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Global Statistics
Regional Statistics
- Sq. M. Prices
- Rental Yields
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- Price/Rent Ratio
- Price/GDP per Cap
- Buy/Sell Costs
- Rental Income Tax
- Capital Gains Tax
- Landlord & Tenant Law
- GDP Per Capita
- GDP/Cap Growth 1 yr
- GDP/Cap Growth 5 yrs
- Economic Freedom
- Ec. Freedom 5 yrs
- Competitiveness
- Property Rights Index
- Currency +/- Value
UAE’s property market collapses
After six years of an extravagant boom, most residential property prices in the UAE are now falling sharply.
Property prices in Dubai dropped 25% in Q4 2008 from the previous quarter, according to Morgan Stanley. High-end apartments and villas were the most adversely affected, with prices falling 35% in Q4 2008 from its peak in Q2 2008.
In Downtown Burj Dubai, apartment prices fell 28% q-o-q to AED2,700 (US$736) per sq. ft. in Q4 2008, according to Global Investment House. In Dubai Marina, house prices have also declined by 18% to AED1,800 (US$490) per sq. ft. over the same period. In the Palm Jumeirah, the value of villas and apartments dropped by as much as 60% in just a few months.
The average price for residential properties all over the emirates was AED1,770 (US$482) per sq. ft. by the end of 2008.
Almost half of all the construction projects in the country have been either put on hold or cancelled. Expatriates are leaving as work dries up. Amlak and Tamweel, the UAE’s two largest home finance companies have stopped offering new loans (the two mortgage lenders accounted for more than 50% of all mortgages in the country).
However fears that the emirate of Dubai could default were eased on February 23, when US$10 billion of Dubai government bonds were bought by the UAE’s central bank. Previously, Abu Dhabi had seemed reluctant to help its more swashbuckling cousin. The government of Dubai has US$80 billion of debt, around one-quarter of which is maturing this year.
Foreign ownership in designated areas of Dubai was legalized in March 2006. The law gives foreign owners a freehold title, registered with the Dubai Lands department. It also allows them to sell or lease the properties without restriction.
RENTAL YIELDS
Last Updated: Sep 30, 2009
Prices, rents down in Dubai
Prices are falling, rents are falling, and the difference between this year and last year in Dubai is marked. But considering the amazing rise in prices between 2005 and 2007, the wonder is that prices have not fallen further, because while prices are well down on last year, they are not yet back at 2007 levels.
Another surprise: Prices and rents seem to have fallen at about the same rate. We find that Dubai apartment gross rental yields range between 5% and 7.5%, which is quite similar to last year, the difference being that larger properties surprisingly yield the most now.
TAXES AND COSTS
Last Updated: Aug 15, 2008
Tax on rental income is low in Dubai
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | nil | nil | nil |
| Click here to see a worked example | |||
Source:![]() |
Disclaimer | ||
Rental Income: There is no income tax, but that is slightly misleading, as there is a 10% tax on residential leases, assessed on the rental income.
Capital Gains: There is no capital gains taxation in Dubai.
Inheritance: The thorny issue of inheritance has caused a lot of debate. It is hoped that the position will be clearer once the new Land Law is enacted.
Residents: The Residents' visa renewal fee is AED1,360 (US$370) every three years per person.
BUYING GUIDE
Last Updated: Nov 19, 2007
Total transaction costs are very low in Dubai
Total round-trip costs are around 3%-7%. There are no property-related taxes in Dubai, which accounts for the low transaction costs. There is only the 2% registration fee and real estate agent's commission (1%-5%).
LANDLORD AND TENANT
Last Updated: Mar 04, 2009
UAE’s rental law is pro-tenant
The government introduced a rent cap of 15% in 2006, which was slashed to 7% in 2007. The rent cap was further reduced to 5% in 2008, in an effort to curb inflationary pressures.
In January 2009, Dubai’s Real Estate Regulating Agency (RERA) unveiled a new rental index to replace rent caps. Following this a new rental law was released, establishing the rental index as a benchmark for rent increases.
NEW RENTAL LAW | |
| CURRENT RENTAL RATES | FOR 2009 |
| Equal to or 25% below the rental index | |
| 26% to 35% below the rental index | |
| 36% to 45% below the rental index | |
| 46% to 55% below the rental index | |
| More than 55% below the rental index | |
However, RERA has come under criticism because the new rent figures were much higher than current rental rates in the market. The rental index, compiled during mid-2008 (at the height of the property boom and before the fallout from the global financial crisis), gives an inflated view of rents in Dubai. The discrepancy caused uproar and confusion among tenants who were left watching their landlords hike their rents to unwarranted levels.
This prompted RERA to update the new rental index earlier than planned. The revised index is due to be released in April 2009. Those tenants who have not yet renewed their contracts are likely to hold on to their old contracts until the new index is released.
ECONOMIC GROWTH
Last Updated: Feb 26, 2009
The UAE faces challenging times
The United Arab Emirates (pop. 4.5 million) is one of the most developed countries in the Middle East. The UAE’s economic prosperity began in the early 1970s, after the changes in world oil prices. In 1971 the UAE was established as a federation of seven states. Then in 1973, the economies achieved monetary union with a common currency, the Dirham.
Despite enormous reserves of wealth, the UAE experienced erratic economic growth, with large slumps (-19% in 1986) and large growth spurts (16% in 1989 and 23% in 1990). However on balance growth has been strong, with an average of 6.5% annual GDP growth rate between 1972 and 1998, and similar growth since then.
Since the mid-1980s, people from all across South Asia have been attracted to settle in the country due to its high living standards and economic opportunities. This resulted in a large increase in population, with expatriate workers comprising 91% of the total workforce.
The UAE economy is extremely open and dynamic, a real hub of trade and enterprise. While oil remains the core, the non-oil economy has grown rapidly.
As a product of its diversification, Dubai now enjoys thriving tourism, real estate, finance, and manufacturing sectors. Service industries have grown fast with free trade zones in IT and the media. It is the home of numerous multinational companies such as AT&T, General Motors, Heinz, IBM, Shell, Sony, Reuters and MBC.
But the UAE’s economy, especially Dubai, is now facing challenging times. Many businesses are down-sizing. Banks are reluctant to lend. Nearly half of all construction projects in Dubai have been halted. Dubai’s stock market fell 72% last year. The real estate sector, which contributes around 15% of GDP, is collapsing.
Overall GDP growth is expected to slow sharply in 2009, with estimates ranging from 2.7% to less than 1%. For the first half of 2009 the economy could contract by as much as 1%, according to Standard Chartered.

RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $5,224 For a 120 sq. m. property, usually an apartment. | Rental Yield: 5.37% For a 120 sq. m. property, usually an apartment. |
| Rent/month: $2,807 For a 120 sq. m. property. | Income Tax: 0.0 Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
5.1%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice. | |
DECEMBER 2009
- Worried investors batter Dubai market - New York Times
- BarCap told customers ‘buy Dubai’ just before crisis - Times Online
- Climate of fear among Dubai's property investors - BBC
- Towering follies: the Dubai architecture you couldn't make up - The Guardian
- Debt crisis tests Dubai’s ruler - New York Times
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