Dubai Real Estate Myths Vs Facts - The Shocking Truth Revealed!

People believe they have been priced out of the Dubai real estate market, and now it is too expensive to buy.

Firstly, people are not being priced out of the market because if we look at the actual comparisons globally such as the luxury segment for example, at the moment in Dubai one can get one square meter in $3,850 but the same square meter in Central London is going to cost $19,300 if we get into New York and in Manhattan that is going up to $22,850 and $28,300 in Hong Kong. as discussed above Dubai in terms of affordability is cheaper than various kind of mega cities such as Singapore, London, Paris, etc.

So, if people say they have been priced out of the market because of the prices in Dubai, then it is evident that they are nowhere close to any of the other cities. When we look at all these cities except only Singapore, most of them have old infrastructure, don't have this spanking new ecosystem, with crime as high as a skyscraper, the streets filled with homeless people, and the quality of life no way close to what is offered in Dubai. At 1/4th, 1/5th, or 1/8th of the price, one can have investments in one of the most dynamic and beautiful cities in the world that has an amazing future.

Also, there was even an announcement recently made by the Finance Minister that says there is no intention to incorporate income taxes anytime soon but we know that there has been the introduction of a corporate tax at about 9% which still on a global level is less expensive than most of those major cities that we discussed. DMCC in Dubai has partnered with the government in Monaco, which is the tax haven of Europe. The same system is now being incorporated in Dubai because the city intends to become the Monaco of the Middle East. Just like Monaco is attracting millionaires, centi-millionaires, and billionaires to Monaco, Dubai is also driving them into Dubai by creating the most friendly taxation system in the Middle East.

Dubai is facing a real estate bubble.

If we look at the current positioning on the market, Dubai is nowhere close to a bubble. There is a UBS Global Real Estate Bubble Index Report published annually, which comes out from the Bank of Switzerland, which is the world's largest private wealth management bank. They handle over $4.1 trillion a year, and they measure bubble risks in 25 of the most popular cities in the world. There are four categories, and Dubai is second from the bottom, which is in the moderate category and is not even in the overvalued or risk category.

So, when we look at the global report which measures the potential for risks, Dubai is still sitting in a very strong position, though considerably risen because of the sheer demand that has arisen in the Dubai market. So, demand will always drive prices upward. When prices are going up consistently but the demand is not proportionate to that, it is when the risk of the bubble starts to appear, but Dubai has increasing demand for luxury and affordable categories in all sectors of real estate: commercial, residential, retail, hospitality, and theaters and entertainment. In every single area, there is a huge spike in demand, which is also leading to an increase in prices, so the demand is rising as fast, if not faster, than the availability of inventory in the market. So, that is not a bubble.

By definition, in a slow-moving or a flatlined economy, when we have any one industry that is showing a consistent growth, there is the risk of a bubble.

• Dubai does not have a flatlined economy but one of the most stable economies in the US World News Reports and the most aggressive growth percentage projected on the planet with clear indicators from the 2033 Urban Master Plan.
• There is the real estate strategy 2033, where the target is selling 1 trillion worth of real estate every year.

So, there is a strategy in place that is engineering Dubai’s growth. This is not organic or something that is just randomized, it is happening based on plans, which is why Sheikh Mohammed said that the future belongs to those who can imagine it, design it, and execute it. It isn't something that you await, it's something that you create. Recently, he also made a statement that the world does not wait, and the future does not belong to hesitant people. Dubai is achieving everything in line with the agenda. They had their strongest year in business, GDP, and performance last year. Sheikh Mohammed personally announced on behalf of the UAE that they are in a very good place.

Dubai is too dependent on any one sector and not a diverse economy, so if one of those sectors faces disturbances, it is going to crash the entire economy.

When people talk about that, they refer to oil. While 30% of the GDP in the UAE is still oil dependent but Dubai is less than 2%. Dubai is making money from education, healthcare, business ecosystems, environment, exhibitions and events, real estate, technology, financial services, hospitality, and tourism. So, Dubai is multifaceted as an economy and not dependent on oil.

The one thing that has set Dubai apart from the rest of the world is that the rest of the world are organic cities, but Dubai is an engineered city. The difference between the two is that an organic city has growth that is influenced by geopolitical situations, such as the economic situations in that region or maybe wars, etc. So, they are very influenced by the local or regional situation. Dubai is also influenced because it is an international city, but not as much as it is mainly an engineered city.

This city is growing based on a plan and this is not natural evolution like organic cities and when we build our plans for 10 years, 16 years, and 45 years later, we are factoring into it global scenarios like wars, change of governments, economic tumbles, pandemics we look for all of that we would never be able to 100% control it but we can anticipate those and build our buffers in place so when that happens we are still engineered. Dubai is an engineered city, and they know where they are going and are mapping every step of that process without being dependent on just the regional influences.

Dubai is in the Middle East, which geopolitically has a lot of issues and instability, and therefore, that is going to affect the Dubai real estate market.

Today, Dubai has become the solution to the problems of the world. If we are living anywhere in the Middle East, we can't even plan for tomorrow morning as we don't know if we are going to wake up or not. Dubai is giving plans for 10 years, 17 years, and 45 years, which is why the Fortune 500 companies are all trying to be in the line for Dubai. The highest number of millionaires are migrating to this part of the world because they can see the future for themselves, their businesses, and the future of this economy. In terms of safety, Dubai is one of the safest cities and outclassing most of the economies on the planet. From quality of life to opportunities, Dubai has become the solution to the problems of the world.

In terms of the geopolitical situation here, everybody felt that Dubai would be impacted by local and regional events. If we go back to the Iraq and Kuwait War at that time, from 2003 to 2008, people sensed that this was going to impact Dubai. But Dubai had its highest years during pre-recession from 2003 to 2006 till 2008 were the best years in real estate in a baby market. Then, there was the Arab Spring from 2012 to 2014, and a lot of countries in this region saw internal revolutions, and this was assumed to be a problem. All the money came to Dubai, and the city hit its peak of 172 points on the price index in 2014.

Once the Russians stop investing here, then the Dubai real estate market is surely going to crash.

Russia in February 2022 decided to walk into their neighbor's yard, and everybody said that this is going to be World War III and its global conflict and, therefore, will lead to issues in Dubai also. But Dubai had a record year after record year, and it wasn't because the Russians or the Ukrainians were putting their money here; they were barely 18% of the market while the rest 82% was coming from over 180 other nationalities.

For the last two years, the Russians have stopped investing. They are taking their money out and going to Bali and Thailand. 2023 and 2024 have been record-breaking years for Dubai, and the world is still trying to figure out how Dubai managed that without the Russians. When that conflict in Russia happened, the money came to Dubai, and they had a record year.

Then, in 2023, Israel walked into Gaza and Iran, Lebanon, and Syria was involved in a certain way and people felt that this is close to home so they are going to have a problem. Dubai smashed the 2023 record last year. In 2023, Dubai had 1,66,000 transactions worth 634 billion, and everybody said this has to stop as this is the ceiling, and they crossed that on 30th September last year in just three quarters, and the strongest quarter, which is Q4, was still coming where Dubai achieved 760.7 billion from 266,000 transactions.

Dubai is only for the wealthy, such as the ultra high net worth individuals and Fortune 500 companies. People who don't have that kind of money how are they going to invest in Dubai so, it is assumed to be only for the rich.

Last year, the projection was that 6,700 millionaires were relocating to Dubai, and 1,70,000 new people came to Dubai. The Global Power City Index looks at the new job creation, and Dubai is one of the highest in the world. The city is anticipating a 70% increase in its population, which is another 2.5 million people. These are not the millionaires and the billionaires of the world, they are the working classes and the middle-income range, all looking for an opportunity because they believe Dubai is the future.

If we look at the mix of the units that came out into the market last year, 71.8% of those units were apartments, 29.3% were townhouses, and only 4.3% were villas and high-end mansions. So, this myth that if you don't have the money, Dubai is not for you is far from the truth because the reality is that it is for everyone who is coming to Dubai today. Probably about 2% or 3% of that would be the super rich, but over 95% of the people are coming in for the potential to become who they are, and many of them may not come here as millionaires, but they will continue to live here as millionaires.

In about three to four years, when all of the off-plan projects are handed over, there is going to be an oversupply of one-bed.

Contrasting to the above statement, when all these units are handed over, there will be a shortage of supply. Dubai has parallel markets running in Dubai. People are comfortable when they look at a property cycle, and they see that when the units are starting to hand over, they want the developers to pull back; that's the model they understand.

In a typical property cycle, developers will start a cycle when demand is showing up, and for two to three years, there is a lot of off-plan inventory. But in year 3, when inventory is coming closer to completion, developers slow down in traditional markets because ready units are available if we launch a new unit now no one is going to pay that kind of money and the serious investors who came in early have already made their money and they will cash out. So, developers hold back, and then the ready inventory becomes the market, and a new player emerges - the homeowners. When that is absorbed, then it is the developers’ turn again, but in Dubai’s market, they don't have a property cycle anymore. They have a property wave. Dubai is operating on a wave, and it's almost like a tsunami.

Dubai has a projected increase of 70% of the population in the next 10 years, that is 2.5 million people. They need roughly 50,000 new homes every year for that many people and 200,000 new homes just in the next 4 to 5 years to accommodate those coming in the next 4 to 5 years. So, all the launches happening now are not for the next 3 to 4 years. Everything launched from 2020 till 2024 is all in handovers now, some of them in early phases of handover, and some will handover 2 years from now.

So, everything coming into the ready home market now is to take care of the market requirement and the 1 million new people who are coming in the next 4 years. The launches of today are the requirements of the market from 2028 and beyond. The requirement of the market today has been taken care of from 2020 to 2024, and that is the inventory available for people to buy today. What is being launched today by the developers in line with the D33 Agenda is to make sure once Dubai gets to 2028 and all of this is going to be absorbed, they will have more homes coming into the market because an additional 1 million will come in the next 4 years so this launch is for the future not for now.

Last year, they had 28,300 units handed over and had 1,70,000 new residents alone. Now, the average size of a family in Dubai is 5.3. This data is from the CEIC (Census and Economic Information Center). So, if Dubai has 1,70,000 new people coming into the city, they need 34,000 homes to accommodate them either on a rental basis or if they want to buy it. 34,000 were required last year just for the new people, but Dubai handed over 28,300, and they were shot off 5,700 homes last year just for the new people coming in.

Now, what about those in the city who have elevated their lifestyle and earnings and are looking to buy? The holiday home companies are coming in and approaching owners, and taking up their units. Holiday home demands have gone up by 30% in just one year, but Dubai is short of homes for the next 16 years. 5.15 million people will come in the next 16 years, and there is a need for 1 million new homes in the next 16 years. That is an average Handover of 62,500 homes every year for the next 16 years, but they are only handing over between 20,000 and 25,000 a year.

The traffic will get unbearable in Dubai, and they won’t be able to manage the infrastructure and reduce traffic.

It is better to have crowded streets than empty ones. Crowded streets mean the economy is doing well, and people are coming. The Challenge is that when people decide that they want to go and live in Dubai, they can make a decision in a week or even in a month or if families are deciding, they might make it in three months, so the infrastructure will take longer to develop compared to people deciding to come in. The government is clear about what they want to do.

Dubai is a city of the future not just for real estate or investors but for people to come and raise their families. Last year, Dubai had a 10% increase in new vehicle registrations, while the global average is 2%. So, for every new vehicle not renewed, new vehicle registrations anywhere in the world as an average 5 are being registered in Dubai. However, Sheikh Mohammed announced the internal roads plan, 3.7 billion into 634 kilometers of internal roads. So, Dubai is now building, over the next 5 years from this year till 2029, 634 kilometers of internal roads in 12 different community areas where urbanization is expected to grow between 30% to 80%. There are 21 projects in these areas in the next 5 years to increase 634 kilometers of roads. There is the main road plan where 16 billion is being put into 22 projects so that they will be able to handle 6 million people on their roads.

Sheikh Mohammed last year announced the biggest ever budget in the history of the Emirate - 272 billion from 2025 to 2027. This year, 86.27 billion is being put into the development of the infrastructure, 46% of that is the infrastructure such as the roads, highovers, communities, systems, 30% of that is going into the development of the social agendas such as the parks and beaches for women, children, and elderly, 6% is going into government transparency and innovation and 18% is going into law and order, justice and emergency response systems. With the onset of 2.5 million people in Dubai, the city is beefing up its law and order systems. 18% of the annual budget is going into creating an emergency response and a safety ready force.

It is necessary to have a sponsor to purchase property in Dubai.

It is the opposite. You buy property, and after that, you can get a visa to live in Dubai. We don't need a visa or a sponsor to be here in Dubai. So, it is a misconception. It probably came out of the early years of business when to register a company here, there was a need for a local sponsor. They had to have a 59% share, but even that is a thing of the past.

With so many free zones where one can have 100% ownership, some of the mainland companies and certain key activities still require having a local ownership. But it is a complete myth that to own property, you need to have a local sponsor. One can buy as many as 200 units and plots just by themself. The 99-year lease is not for Dubai; it is there in Abu Dhabi, though Abu Dhabi has also created certain places as freehold. In Dubai, the commercial spaces are on a 99-year lease, but it is not on the residential; it is all freehold.

Going directly to the developer will get you a better deal and a better discount.

Not every developer will do this for you; the premium and recognized developers will not do it because you are coming for one unit and they've just sold 800 units to others. To keep one investor happy, they are not going to upset 800. A few in the business could be doing that, but then again, they do not define the industry and Dubai. The premium developers protect their investors, and that's why they refuse to go down on the price.

As business people, we want to put our money with someone where we have the confidence that no matter what happens, that developer is going to hold and protect our investment. There is an amount that is going to be paid to the broker, so if we go to the developer, we are going to get a discount, but it is not true in some cases. In many cases, it is probably a salesperson who's making that promise, not necessarily the leadership or the management of the company. In case, we feel that there is something that the broker is going to get, firstly we need to understand that it is paid by the developer and its factored into the price already, so if we are going to a premium developer and he is not going to come down on the price in the interest of the investors to protect them and we are anyway going to be paying a price that has been already factored into it. So, we have already got that factored in.

If we go directly to the developer, they are going to tell us that their product is the best in town. Even if they do understand that there is another developer whose product works best, they will never tell us that. We don't have access to that information and don't understand the legacy of these developers. When we work with a broker, they will provide us with renewed confidence because there is a second opinion that matters. They will also provide their insights on better opportunities so that we can make an informed decision. This is the reason why today, 80% of the market or even more than that in some cases is broker-led sales. Moreover, if every buyer can get it from the developer directly, then the broker market would not exist, so it just does not make sense.

Many new global investors, especially the new ones, believe that the idea of EOI, i.e, expression of interest, is just a sales gimmick and has no real benefit or value, and they would just wait for the brochure to come out on launch day before making a decision.

It's not a gimmick but a sales strategy, and it's not only in real estate. Samsung recently made an announcement some time back that they are taking advances and bookings, but the units will come out later. So, going by the same logic, one of the best mobile phone companies in the world is just using a gimmick. If we look at premium cars, we cannot get one straight away; we have to book in advance and pay a token amount to show our seriousness, and we could even lose that if we change our mind. So, if every premium industry is permitted to have this kind of a way to secure their business, then why does real estate have to be using it as a gimmick?

Real estate has the most prolific market in the world with so much demand. Developers have people standing in line looking to buy, and they have to hold a unit for them while they do their research. In the meantime, the developer will sell it to the next person. So, just like the buyer wants the developer to demonstrate that they are a serious player in the market, a developer also needs to know that the buyer is serious with them as well.

For example, a developer launched a community and had 1,900 units, but they got 3,900 EOIs; therefore, for every unit, there were two people ready to buy. EOI isn't just securing the business for the developer, it tells them that the client is serious, and it also gives them good market intelligence that which type of units they are putting EOIs for, like is it the studios or the one beds or the three beds. So, based on the number of EOIs coming in, the developer can already see the attractions in this kind of community, and it will allow them to make even more adjustments so the community becomes even more attractive. So, it is a strategy; it is not a gimmick.

When Dubai faced floods last year, a myth arose that Dubai does not have a sewage system.

To say that Dubai does not have a stormwater management system is not far from the truth, but there is some truth in that. Dubai rarely experiences phenomena like floods, so naturally, they won’t put billions of dollars into creating an infrastructure for something that might happen in two generations. So, that is not a good use of public funds because eventually, those will all come from tax. So it doesn't make sense when they don't have anything there. Dubai makes their buildings to withstand earthquakes because they have Iran on a fault next door and that is a more real threat to them than rains. Their buildings are designed for that because that is their environment in which they live.

If we look at the US, every single year they have storm and hurricane seasons, and with all their intelligence, technology, and money, they are still flooded every year. Knowing it will happen, they still haven't been able to build the infrastructure to stop it and end up getting flooded. So, how can we expect a city that has not had anything like that in 75 years to react and respond better than the most intelligent countries in the world. Further, between 2005 and 2022, in 17 years, 3,000 major city floodings's an average of 176 a year, 14 major city floodings every single month, that is three to four floodings of cities every week for the last 17 years.

On the third day after the rain, Sheikh Hamdan announced an 80 billion storm water drainage system. That meant the moment the rain hit, they realized they could not allow this to happen again and were already talking to governments around the world where they are known to have drainage systems because of the rain. 3 days later, Dubai announced that they were putting in a system. Which city on the planet responds so fast? Now, if we look at New Orleans Hurricane Katrina, 254 mm of rain fell, which is the same amount that fell in Dubai. It took 2 months before 25% of the citizens could come back into the city, 4 months before 50% of the residents could come back, and it took 12 years to rebuild New Orleans. But in 5 days, Dubai was back.

When a nation prospers and grows in an organic way to reach a whole new level, not only on a national scale but also internationally, this is when, with the realities and facts, that nation is surrounded by several myths and misconceptions.

The Emirates of UAE, Dubai is a city growing at a rapid pace in terms of its infrastructure, technology, and attractions. This mutually beneficial city is nothing short of a marvel in itself that seamlessly coordinates its decisions and actions to reach a higher global position. With the help of this blog, we have tried to break some of the most common myths and misconceptions associated with Dubai’s real estate market that hamper the decision-making ability of many buyers and investors interested in investing in Dubai.