For foreign investors, the real estate markets in the United Kingdom (UK) and the United Arab Emirates (UAE) represent two of the most exciting and lucrative investment options available today.
The value of real estate properties in the United Kingdom continues to rank among the highest of any asset class in any worldwide market. The United Arab Emirates (UAE) is among the most sought-after locations for real estate investment and a destination for worker migration for very similar reasons. In the United Arab Emirates, particularly in Dubai, there is still a very strong demand for real estate property investments.
Having said that, there is a significant disparity in the cost of living between these two areas. For instance, the cost of luxury flats in London and other regions of the United Kingdom is often more than the cost of buildings of the same type in Dubai.
In spite of this, real estate investments in either the United Kingdom or the United Arab Emirates continue to draw both long-term investors and profit speculators from all over the world. This makes it possible for an investment in either of these locations to be highly profitable.
Before you make the commitment to buy property in any of these two magnificent destinations, there are a few things you should think about first.
Investing In Real Property To Earn Rental Income, Also Known As Rental Yields
The prospective rental yield of a property is the first thing that investors would wish to take into consideration when making investment decisions. This is vital information for investors who are considering purchasing homes in order to rent them out. Even for individuals who plan to invest in a property with the intention of selling it after a few years, rental yield is still significant since it has an effect on the value of the property when it is put up for sale.
In comparison to those in the UK, rental prices are higher in the UAE.
Rental prices for real estate properties in the United Arab Emirates (UAE) are, on average, greater than rental prices for real estate properties in London and throughout the rest of the UK.
According to the data currently available on the market and the studies that have been generated, rental yields in the UK do not surpass 3 percent. This is the case in the vast majority of other cities in Europe. The United Arab Emirates, on the other hand, has rental yields that may reach up to 10 percent. The income you receive from your rental properties in the UAE is three times more than the income you receive from your rental properties in London. This constitutes a comparative advantage.
Greater Costs and Benefits in London Avoid Automatically Drawing in a Larger Monthly Rent Payment
One of the peculiar things you need to be aware of if you are considering investing in England’s real estate market is that properties with higher values do not necessarily mean that they are able to command higher rents from tenants. This is one of the things you need to be aware of if you are considering investing in England’s real estate market. This should serve as a warning to prospective investors who may enter the London real estate market with the assumption that they can just buy up any property and generate income as a result. That is not how it works at all. Choosing the right investments in real estate will still require considerable consideration on your part.
The Consistency of the Market Over the Long Term
If you intend to resell your house after a number of years have passed, the next item you should think about is the strength and stability of the market over the long term. Since the beginning of time, the market economy of the United Kingdom, in general, and the real estate property sector, in particular, have both been characterized by a high degree of consistency and robustness. In contrast, the real estate market in the UAE was already experiencing a decline before the epidemic began. It has only just lately started showing signs of revival after a long period of decline. However, 2021 generated excellent results, and 2022 appears to hold even more promise for the real estate market in the UAE.
The Rapid Growth Rate Of Capital Appreciation In London
Real estate investors who choose London over other locations are planning to take advantage of the rapid rate of capital appreciation in the city’s housing market. The most important takeaway, it would appear, is to make purchases while prices are still low and capitalize on the rate at which real estate values are rising. When compared to other developed global financial capitals, London actually has one of the comparatively quicker rates of capital appreciation, making it one of the most attractive places to invest.
This is beneficial for investors who purchase properties with the intention of realizing a profit when the opportunity to do so presents itself by selling the properties at a higher price than they paid for them. But there are investors that are interested in the middle ground. These are the kind of investors that, rather than depending solely on the possibility of a windfall after a period of several years spent waiting for property values to go up, would want to have a regular income from the rentals they collect.
Investors in Dubai are opting to purchase houses rather than apartments.
Only in the 2000s did opportunities in the UAE property market’s real estate sector start drawing interest from foreign real estate investors. This came about as a consequence of the vigorous and extensive real estate construction projects that have been taking place in Dubai. However, the pace of appreciation of real estate in Dubai hit its zenith sometime around the beginning of the second decade.
The purchase of detached houses and villas is becoming an increasingly popular choice among investors in Dubai, which is the city’s primary trend. According to reports from market experts based in Dubai, the number of transactions involving the purchase of villas and townhouse units set a new high in 2021. There have been sales that set new records not just in the luxury part of the market for detached houses and villas, but also in the more affordable category. The cost of purchasing a home went up by 5% in 2021, and it is anticipated that this trend will continue long into the next year.
The Cost of Living and the Value of Real Estate
The cost of living in London is consistently ranked among the highest of any city in the whole globe. This is due to the comparatively large mortgage payments that are required there, in addition to the rentals that are paid by employees in the middle class for their residences. The following indexes will allow you to compare the two markets:
If you include in rent, the average consumer price in London is 18.76 percent more than the average consumer price in Dubai.
Prices for rented housing in London are 15.52 percentage points higher than those in Dubai.
When compared to Dubai, London’s Local Purchasing Power is 22.88 percent less than what it is in Dubai.
When compared to those in Dubai, the cost of groceries in London is 8.16 percent more expensive.
The average cost of a meal in a restaurant in London is 36.75 percent more than the average cost of a meal in Dubai.
Prices in the UAE and the UK Compared
A one-bedroom flat in Dubai would cost around $5,900 USD per square meter to purchase. This would encompass around 120 square meters of space. When put next to the cost of a comparable flat of the same size in London, which would be around US$26,260, the price difference becomes clear. The scarcity of new residential construction projects in London is a significant contributor to the city’s considerably higher housing costs. It is almost impossible to find vacant land in central London for the purpose of constructing brand-new residential or commercial buildings.
In London, the city is split into north and south halves.
Before you invest any money, you should bear in mind that the property prices in the midlands region of the United Kingdom are often lower than the property prices in other parts of England. Another significant realization is that rental properties located in the north have traditionally been able to achieve larger returns on investment than rental properties located in the south. The historical statistics on rentals, according to the analysts’ interpretations, provide credence to this conclusion.