From Booms to Busts: A Historical Analysis of UAE Property Prices

The UAE celebrated its 52nd anniversary in 2023 so this is a great time to look at an analysis of UAE property prices. Dubai is one of the seven emirates within the UAE and rests on the Arabian Peninsula on the southeastern side of the Persian Gulf. It’s the second largest of the emirates behind Abu Dhabi but Dubai is by far the most popular. So that will be one of our main focal points in this analysis. Keep reading if you’re interested in buying or you want to sell property in Dubai

So the first point of this analysis is the rich and prosperous nature of the UAE. Most people look at these countries and think that oil is where the prosperity comes from but that’s actually incorrect. Oil provides only 1% of its economic earnings. So if it’s not oil, then why is the UAE so rich? Let’s dig deeper into our analysis of UAE property prices to find out!

Tracing it Back to the Beginning

In the 1950s, we saw Abu Dhabi thriving with high oil revenues. While Dubai was also capitalizing on this same market, Abu Dhabi always came out on top. Since Dubai couldn’t compete with Abu Dhabi in terms of oil, its ruler (Sheikh Rashid bin Saeed Al Maktoum) came up with a brilliant idea that would survive into the 21st century. His policies shifted away from oil onto infrastructure. In 1960, Dubai built its first airport. This paved the way for two essential elements that would eventually send Dubai’s market over the top.

#1: Infrastructure and Tourism

Dubai’s airport opened the door to other developments which become the foundation of what we see today. It made investors realize that wealth didn’t have to come from oil. Instead, it could come from infrastructure. So this became the long-term strategy. Dubai used its limited oil income to fuel this economic initiative and it worked. Tourists started flocking to Dubai, which generated more revenue that was reinvested into even more infrastructure.

Today, Dubai is one of the top tourist destinations in the world. This industry generates 20% of the countries income!

#2: Attracts Businesses From Around the World

Once Dubai set itself as a top tourist destination, it proved to investors that its economy could support businesses. In 1985, Dubai capitalized on its growth by creating the first free trade zone – Jafza. Businesses were attracted to this zone by unbelievable tax breaks and custom policies designed to make it easier for foreign companies to take root. This proved to be a huge success – a success that led to Dubai’s opening of 30 more free trade zones. Once again, property prices rose as a result of Dubai’s innovative approach.

Analysis of UAE Property Prices: What Attracts Foreign Investors

Dubai created the blueprint that would eventually be followed by the rest of the UAE. Think of just how successful this blueprint is today. Dubai does not have a huge population, yet it boasts the largest manufacturing facilities, lowest labor costs, and has a lot of natural resources. In essence, they created the blueprint for efficiency. What’s crazy to think about is that this growth shows no signs of slowing down.

The UAE follows this same blueprint, which is built on four essential factors:

Lower Taxes

Although governments require taxes to function, Dubai’s blueprint is so efficient that they are able to introduce massive tax breaks without losing their ability to function. In fact, some businesses and workers pay no taxes at all! But even for those that do have to pay, the fee is extremely low in comparison to other countries.

Government Policies

Businesses setting up in Dubai are supported by the government so it’s quite easy. Since the UAE has such a stable economy, it remains in good standing with the rest of the world. Furthermore, the countries policies keep investors safe.

Business Infrastructure

Top businesses are attracted to the exceptional tax breaks that are implemented within the UAE. Businesses are also attracted by the global positioning of the UAE. Its geographical location makes it ideal for connecting with other markets around the world. Overall, the business layout within the UAE is highly attractive. 

Attracts Top Workers

When top businesses set up in a country, highly skilled workers always follow. The UAE is home to some of the most highly skilled workers in the world. We’re finding that the low tax breaks and stable economy is driving even more skilled workers to this country.

Transformation into What we See Today

Now that we’ve looked at the history of the UAE and the foundational blueprint that led the country into the 21st century, let’s look at the transition into what we see today.

We start our analysis of UAE property in 2002 with the property rights for non-residents announcement. This policy was so attractive that private investors began pouring money into Dubai. This led to the development of several popular destinations including Palms and Jumeirah. As a result, a large influx of foreign capital hit the economy and led to unprecedented growth.

By 2003, Dubai’s growth spread across the rest of the UAE, which led to even more foreign income pouring into the emirates. The rest of the UAE prospered from Dubai’s tremendous success.

Eventually, the Real Estate Regulatory Authority (RERA) was established due to the growth throughout the UAE. This coincided with the real estate book of 2007 and was designed to streamline the land acquisition process. Then in 2008, real estate transactions became publically posted and revealed just how lucrative the UAE transformation had become.

Trouble Struck in 2008

Law 13 was published in 2008 which ended up paving the way for unplanned listings and assigned a limited amount of responsibility to developers. It became challenging to restore investor confidence but once again, Dubai would create the blueprint for success. They installed a number of protective measures that would prevent the property market from heating up like it did prior to 2008. These measures continue to be successful today.

But in 2009, the entire world shook as major banks crashed and burned, leading to the loss of billions across industries worldwide. This affected the property market throughout the UAE and sent property prices plummeting. It didn’t regain momentum until late in 2011.

Recovery From Economic Disaster

As we’ve seen throughout this analysis of UAE property prices, Dubai set the bar by quickly establishing a new regulatory framework that encouraged stability and sustainability. This would cause the market to slowly grow by 13% from 2010 to 2015 but more was needed.

As a result, even more reforms were written into the law that introduced new investment facilities into the market. The goal was to create stability and protect the economy from disasters like the one experienced in 2008.   

In 2021, Dubai recorded 84 startup businesses that earned a whopping AED 2.34 billion! It’s safe to say that these recovery measures worked.

Analysis of UAE Property Today

Today, we’re seeing the economy start to take off and this growth is not expected to slow down. The new emphasis is on sustainability and eco-friendly development practices. The UAE has a timeline in place to achieve net-zero emissions by 2050. Looking at their track record, they are likely to achieve that ambitious goal. Since the economy is still recovering, investors are able to find lucrative deals as values continue to climb.

The bottom line is that we expect property prices to take off in the coming years so right now is the time to get into property investment in Dubai.

Right now, property prices have not caught up to their potential so this is the time to strike. If you need proof, look at the history of Dubai. This country created the blueprint that has made the UAE such a lucrative location.

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