Investors in property or any other asset are looking for where their money will “work the hardest.” So you put your money to work making money, so you don’t have to. Now when it comes to the Ebb and Flow of the securities, bonds, FX, or Crypto markets, you just have to sit back and watch the ride, but the property has many more moving parts. So, given all these different aspects, is it better to invest in property in Abu Dhabi or Dubai?
Volatility: Undoubtedly, Dubai property is one of the most volatile in the world. It stems from the elasticity in the population. More jobs equal more population. When the jobs dry up, the people leave. Compare that with most countries, and when the jobs dry up, the people stay as it is their home country. Abu Dhabi has the stability of massive Sovereign Wealth Funds and Oil reserves to balance out the highs and lows. So, if you’re a risk taker, then Dubai is the place, slow and steady wins the race in Abu Dhabi.
Returns: Returns in Abu Dhabi are slightly better than in Dubai, particularly when comparing net returns. In recent years the service charges in Abu Dhabi have been severely curbed by the Municipality, and now apartment charges can be as low as 10 dirhams per sqft and villas from 3 dirhams. Dubai tends to have higher service charges and slightly lower yields. This has been made worse by recent price spikes.
Landlord’s Rights: The tenants are one of the wrinkles of property as an investment. Your returns can be hugely affected by them and the laws which surround them. For example, both emirates have caps on how much you can raise the rent (Dubai has the rent calculator; in Abu Dhabi, it is 5% per annum). However, your ability to evict a tenant who is paying low rent varies wildly. In Dubai, it can take up to two years (you must give them notice 12 months before the renewal date). In Abu Dhabi, it can be as little as two months (notice must be given two months before the renewal date). And in Abu Dhabi, you can rent to new tenants at market rent. In Dubai, if you evict a tenant, it must be for a reason (such as selling) and not to rent to a new occupant at higher rates. So in Dubai, you can see your property appreciates hugely in value, but the rental return might lag well behind for some time.
Transaction Costs: Transfer fees in Abu Dhabi are 2%, and in Dubai, they are 4%, so it can be twice as expensive to buy and sell in Dubai compared to Abu Dhabi.
Choice: Now, Dubai has a clear advantage over Abu Dhabi. According to JLL in 2023 Dubai has 672,000 units, against 278,000 in Abu Dhabi. More than twice as many.
Regulation: Abu Dhabi has caught up with Dubai regarding the law. The Capital now has freehold property, title deeds, and mandatory escrow accounts for off-plan projects. However, it can’t be denied that Dubai, as the more mature market, still has a slight edge here.
Golden Visa: There is now a federal law concerning golden visas, which has aligned both emirates. You need AED 2m (USD540,000) of equity in a property to qualify for a 10-year Golden visa.
Want more guidance? This Guide explains the processes and pitfalls of financing and buying in the UAE’s capital. Guide to Buying and Financing a Property – Crompton Partners Estate Agents.
Want more reasons to invest in Abu Dhabi? Click here for the latest report about the progress of the Abu Dhabi Property market!
