The Emirate of Dubai is currently experiencing a remarkable real estate boom, attracting investors from all over the world and promising exceptional returns – without overly questioning the origin of the funds. German investors are also benefiting from the lucrative opportunities this market offers.

One example is a young entrepreneur from Germany who spends half the year in his tranquil hometown in Lower Saxony and enjoys the winter months in dazzling Dubai. He is particularly taken with the famous Palm Island, where he regularly rents vacation homes. "Dubai is simply an incredibly exciting place," he enthuses. Although he would like to move there permanently, his two cats keep him in Germany.

But it's not just the luxurious lifestyle that attracts him – Dubai also offers immense business opportunities. After selling his start-up, he invested in a three-bedroom apartment in Jumeirah Village Circle, which now generates an annual return of nine percent. He now owns ten properties in Dubai.

For four years, the real estate market in Dubai has known only one direction: up. While the real estate market in Germany is stagnating due to rising interest rates, prices in Dubai are reaching new highs. A JLL expert reports a 21 percent increase in purchase prices and rents compared to the previous year. For example, a villa in Dubai Hills Estate, purchased for approximately €1.3 million in 2019, recently changed hands for over €3 million – an increase in value of 132 percent.

Another expert emphasizes that real estate in Dubai is primarily used as a speculative investment. Many projects change hands several times before completion, yet the final buyers often achieve rental returns of over 10 percent annually. These enticing prospects attract investors from all over the world. In February, hundreds of buyers flocked to purchase luxury villas on the Dubai Islands, which sold out within hours. In 2023 alone, real estate valued at nearly €160 billion changed hands in Dubai, and experts expect this trend to continue.

The boom is also reflected in construction activity: New apartment high-rises are being built near the Palm Island, and luxurious residential areas are springing up in the desert. Despite extreme climatic conditions, more and more people are moving to Dubai. At the end of 2023, around 3.65 million people lived in the emirate, and forecasts predict that the population could double to 7.8 million in the next 15 years.

A key incentive for moving to Dubai is the low taxes. There is no income tax for individuals, and the value-added tax is only 5 percent. Companies also benefit from a low tax burden. Geopolitical crises are also contributing to the boom: Since the outbreak of the war in Ukraine, many Russians have moved to Dubai to escape sanctions, and Chinese investors are also seeking a safe haven in the emirate.

A German real estate agent who now lives in Dubai and works as a project developer is optimistic. "Every successful investor is now moving to Dubai," he says, emphasizing the market's transparency. Transaction histories and rental trends are accessible to everyone, and real estate can even be paid for by credit card. However, purchasing real estate remains a challenge for foreign investors, as German banks do not finance real estate in Dubai, and banks in the emirate are also strict when it comes to lending.

Another example is the young entrepreneur from Lower Saxony who, after selling his startup, invested in "off-plan" properties – projects that are still under construction. Buyers of such properties are protected by strict regulations, and the real estate industry in Dubai has learned from past mistakes.

Despite some risks, the high rental yields and the prospect of capital appreciation continue to attract investors to Dubai. Projects such as the three-by-three-kilometer Damac Hills 2 in the desert or floating villas off the World Islands demonstrate that the real estate boom in Dubai is far from over. Experts agree: The upswing will continue.