Dubai has structured and broadened its sources of income while taking considerable measures to stimulate growth and development. Attracting foreign investment has been, and will continue to be, crucial in order to maintain Dubai’s business appeal, which is realised by constantly improving initiatives in trade, infrastructure, technology, government services and regulatory environment.
Strong investment in tourism has allowed Dubai to attract business and leisure travellers from the GCC, Middle East, Europe and beyond, driving the hospitality and retail sectors. Dubai has constantly moved up the rankings since the launch of the MasterCard Global Destination Cities Index. It ranked eight in 2012, seventh in 2013, fifth in 2014, and fourth in 2015, 2016, 2017 and 2018.
A near tax-free environment (a 5 per cent VAT was introduced in January 2018), freehold property ownership in dedicated investment zones since 2002, a “safe haven” status, and an array of supporting sectors make Dubai an attractive place to work and live.
As a result, Dubai has become a globally renowned city, benefiting from a constant inflow of new businesses and expatriates seeking to move here, creating sustained demand for all real estate sectors, although this has somewhat diminished as a result of recent global and regional uncertainties.
While a more wealth creating industry is required to generate growth in the economy, there have been several positive steps to increase the long-term residential population and reduction in the cost of living. In order to revitalise Dubai’s appeal and thus boost the real estate market, our proactive government needs to stimulate economic growth, which will create employment through investment, which then results in population growth and ultimately real estate demand.
While the downward trajectory in the real estate market for the short term is unavoidable due to subdued economic/market conditions and the oversupply of property in most sectors, the outlook for the medium and long-term is encouraging, fuelled by a pro-active government response and clear focus on economic progress and sustainability.
With the advanced and ever-improving regulatory, financial and physical infrastructure, the UAE will continue as a leading land-sea-air multimodal transport hub, connecting the Far East with the West, and thus attract human and physical capital with a long-term view on living, working, investing and doing business in the country.
Investing in real estate
The implementation of long-term residency visas (up to 10 years) for investors as well as certain professionals, entrepreneurs and outstanding students (conditions apply) has started to come into effect. In addition, with the aim to attract a wider range of real estate investors to the emirate, the Dubai Land Department (DLD) recently announced the launch of the Real Estate Investment Opportunities (REIOs) initiative, under which several investment products will be offered, including collective real estate investment funds; partial title deeds procedures; a lease-to-own system; and investment portfolio applications.
Moreover, the UAE Cabinet approved a total of 122 economic activities across 13 sectors eligible for up to 100 per cent foreign ownership, such as manufacturing, transport and storage, and construction.
A number of government initiatives to stimulate the economy, increase investment and ultimately boost the real estate market have been launched, but they have yet to filter through to create notable employment/business growth.
Local entrepreneurs are the largest employment growth sector, although often as start-ups. The government actively promotes individuals to think freely and create new business. The change in working style through shared office and co-working space has also resulted in greater collaboration and opportunity for entrepreneurs.
The longer-term residency and the return of students from overseas studies to join the workforce are stimulating the residential market. Those completing military duty and returning to the workforce with good discipline and skills not previously used, further improves the workforce capability and human talent pool, which will result in improved business in the medium term.