Expert About Investing in Dubai’s Real Estate: a 10-year Golden Visa, Taxation and ROI

Partnership article

“Dubai is by far one of the most attractive places to invest, especially in real estate, as it is now the new capital of the world” — such a thesis we’ve been told by Giovanni Ledda, CEO of AG LUXURY PROPERTIES LLC (DUBAI). He explained to us in detail why it is worth considering investing in Dubai real estate and why the expansion of the branded luxury real estate market continues in this Emirate.  

Why invest in Dubai?

— Dubai is known for being one of the best places in the world to live, work, holiday, and invest. Its social, economic, and service-friendly environment, combined with its title as the safest city in the world, offers residents and investors numerous advantages over other countries. 

Below are some of the many perks:

• 10-year Golden Visa for an investment of AED 1,000,000 (approximately USD 272,200).
• Attractive taxation with 0%- and 0%-income tax on residential properties and real estate.
• With high returns compared to the main cities in the world, the ROI (return on investment) is very high, starting from 8 to 20%.
• Ranked first for safety.
• Tourist hub: it is among the 5 most visited cities in the world.
• Cosmopolitan living: with more than 120 nationalities currently living in Dubai.
• It is considered the city of superlatives, chosen as the headquarters by the greatest in the world.
• World-class education.
• Ease of doing business.
• Sustained economic growth, a stable economy, and currency.
• Financing options readily available.

Giovanni Ledda, CEO of AG LUXURY PROPERTIES LLC

A 10-year Golden Visa

— Can you give more details about a 10-year Golden Visa for investment?

— The 10-year Golden Visa for investment in Dubai is a government program that offers long-term residency to investors who meet certain criteria. This program was introduced to attract foreign investment and contribute to Dubai's economic growth.

There are several investment options for obtaining the 10-year Golden Visa, including:

• Invest in real estate with a minimum value of AED 2 million (approximately €545,000). This value, however, is in the process of being changed, and soon this minimum threshold will be 1 million AED (248,800.00 euros).
• Invest in a real estate investment trust (REIT) with a minimum value of AED 2 million.
• Start a business in Dubai with a minimum capital of AED 2 million.

Benefits of the Golden Visa:

• 10-year residency for the main applicant and his family (spouse, children, and dependent children).
• Possibility to sponsor employees.
• Access to education and public healthcare.
• Opportunity to buy a property in Dubai. 
• Opportunity to open a business in Dubai.
• Freedom to travel and enter and exit Dubai without a visa.

Validity: the Golden Visa is valid for 10 years and can be renewed at the end of the validity period, in any case, as long as ownership of the property is maintained.

Other government policies regarding real estate

— Maybe there are any other government policies or programs supporting real estate investment in Dubai? Tell us about them, please.

— Sure, here are some examples:

Real estate investment visa:

• This visa offers a 2-year residency for investors purchasing a property in Dubai worth a minimum of AED 1 million (approximately €272,500).
• The visa can be renewed every 2 years, provided the investment is maintained.

Visa for pensioners:

• This visa offers a 5-year residency for pensioners who have a minimum monthly income of 20,000 AED (approximately 5,450 euros).
• The visa can be renewed every 5 years, provided that the minimum income is maintained.

Visa Waiver Program for Citizens of Certain Nationalities:

• Citizens of some countries, such as Italy, can obtain a free 90-day entry visa upon arrival in Dubai.

Reduced taxes and charges:

• Total absence of taxes on real estate properties (owners DO NOT have to pay any real estate taxes);
• The Government of Dubai offers various reduced taxes and charges for real estate investors, such as stamp duty exemption and rental income tax exemption.

Concessionary financing:

• Several banks and financial institutions in Dubai offer mortgage loans at attractive interest rates for real estate investors.

High-quality infrastructure and services:

• Dubai offers high-quality infrastructure and services, such as roads, airports, hospitals, and schools, making the city an ideal place to live and work.

Political stability and security:

• Dubai is a stable and safe country with a low crime rate.

Loans and mortgages for real estate investors

— What is the financing environment like currently for real estate loans and mortgages?

— Currently, the financial environment for real estate loans and mortgages in Dubai is favorable to buyers.

Here are some factors that contribute to this favorable context:

• Low-interest rates: mortgage interest rates in Dubai are at historic lows, making buying a home more affordable.
• Economic stability: Dubai's economy is stable and growing, with a rising GDP and a low inflation rate.
• Strong demand for real estate: the demand for real estate in Dubai is high, both from residents and foreigners.
• Wide range of financial products: banks and financial institutions in Dubai offer a wide range of financial products for property buyers, including fixed and variable rate mortgages, pre-amortization mortgages, and early repayment mortgages.

However, there are some factors to consider before applying for a mortgage loan in Dubai:

• The maximum mortgage amount: the maximum mortgage amount you can get depends on your income, expenses, and the value of the property you want to buy.
• The debt-to-income ratio: banks and financial institutions in Dubai have a maximum limit for the debt-to-income ratio, which is usually 50%.
• The initial deposit: a minimum initial deposit of 25% of the value of the property is required.
• Processing fees: banks and financial institutions in Dubai charge processing fees for analyzing the mortgage application.

Here are some tips for getting a mortgage loan in Dubai:

• Compare offers from different banks and financial institutions.
• Have a good debt-to-income ratio.
• Have a large initial deposit.
• Submit a complete and accurate mortgage application.

The tax system in Dubai

The Emirate of Dubai is known for its favorable tax system, with exemptions from many common taxes.

Here are the main taxes applied in Dubai:

Value Added Tax (VAT):

• Introduced in 2018, VAT is a 5% tax levied on a wide range of goods and services.
• There are some exemptions, such as basic food items, education, and health services.

Corporate tax:

• Introduced in 2023, corporation tax is a 9% tax levied on company profits.
• There are some exemptions, such as for small businesses with a turnover of less than AED 375,000 (around 90,000 euros).

Real estate transaction tax:

• A 4% tax is applied to the value of real estate transactions.

Stamp duty:

• A tax applied to certain documents, such as lease agreements and powers of attorney.

Customs duties:

• Customs duties applied on the import of goods into Dubai.

In addition to these taxes, some other taxes and charges may apply, such as tourist taxes and traffic taxes.

Here are some of the advantages of Dubai's tax system:

• Exemption from many common taxes.
• Low tax rates.
• A transparent and simple tax system.

Dubai's tax system is an important factor that attracts foreign investment and contributes to the economic growth of the Emirate.

Return on investments (ROI)

— Can you provide examples of how it is better compared to the main cities in the world? 

— Dubai offers higher returns on real estate investments (ROI) than many other cities in the world.

Here are some examples:

Average returns:

• Dubai: 8-20%
• London: 2-5%
• New York: 3-6%
• Singapore: 3-5%

Investment example:

Buying a one-bedroom apartment in Dubai for AED 1 million:

• Monthly rent: AED 10,000
• Annual ROI: 12%

Factors affecting ROI in Dubai are listed above. 

However, it is also important to consider some risks:

• The Dubai property market is volatile, and prices can fluctuate.
• Properties in Dubai can have high maintenance costs.
• There is the risk of not finding tenants for your property.

Overall, investing in Dubai can be an excellent opportunity to earn high returns.

Expansion of the branded luxury real estate market in Dubai

— Dubai has now become a global leader in branded luxury residences, with established businesses such as hotels and new competitors such as famous and luxurious jewelry brands, fashion houses, and car manufacturers vying for entry into this coveted real estate market. This trend is expected to grow, with self-branded residences (without hotels) becoming an increasingly important market segment.

Forecasts predict that over the next four years, 78% of Dubai's new branded residential projects will be freestanding, compared to a global average of 41%.

Foreign investors continue to purchase these ultra-luxury homes, pushing values higher. For example, an apartment by Baccarat was sold for 203.1 million dirhams (around 50.8 million euros). These real estate operations are booming, and Dubai is now the favorite destination for those seeking the luxury associated with prestigious brands.

Furthermore, Italian luxury is conquering the Dubai real estate market. Projects such as the Cavalli Tower, Casa Canal by Fendi, Armani Residences, the Urban Oasis by Missoni, and others bring Italian brands into the world of exclusive properties.

Additionally, the success of Dubai Mall continues, recently earning the title of “most visited place on earth” in 2023.

This result is marked by a record of 105 million visitors, an increase of 19% compared to the previous year.

The increase in foot traffic has led to exceptional sales performance for the mall. These trends showcase Dubai's dynamic real estate market and its success as a major tourist destination. Both the rise of branded residences and the popularity of Dubai Mall contribute to the city's economic growth and global attractiveness.

Services provided by AG LUXURY PROPERTIES LLC

—  How can AG LUXURY PROPERTIES LLC help investors willing to invest in real estate in Dubai? 

— AG LUXURY PROPERTIES LLC is a company specializing in sales and rentals in the real estate market, based in Dubai (UAE). The company specializes in property management for real estate investments in the United Arab Emirates. 

Our team made up of professionals with many years of experience, has carefully and constantly followed the incredible development of Dubai, where we operate with the most important local builders. We speak many languages, including English, Italian, and Russian. 

We also offer efficient and professional support to local and international investors, providing competent, flexible, and customized solutions. 

Among the services offered are: 

• customer profiling and available budget;
• selection of the property based on the type of return required and one's economic availability; 
• support for the purchase of the property, even remotely; 
• direct updates and constants of all construction sites; 
• complete customer management for income/rentals. 

This support is also provided after any investment is made. We collaborate with local professionals for the opening of companies in the United Arab Emirates, both offshore and inshore, as well as for the issuing of the Visa and the Golden Visa.

Examples of our projects: