Dubai Real Estate Market Outlook 2024

Hello. I'm Ghada GG Benitez with the Dubai Connect. I am bridging United States investors with the opportunities here in Dubai and I have a very special guest with me today to answer many of your questions. Please welcome Mr. Muhammad Khani from Property Finder. Hello Mr. Muhammad, how are you? Hello GG, how are you? I am doing much better now that you are here. Call me Mr. Muhammad. This is season 2 of the Dubai Connect podcast so it's exciting actually to know that you lived in California yourself and you are an expat yourself and you have children that still live in California but I would love for you to share who you are, what Property Finder is, and how you came to Dubai. Yeah, absolutely. California is what I have always believed to be home, until Dubai became home. Wow. And it doesn't take that much. A lot of us who come to Dubai assume that hey, we're going to come for 2 or 3 years and then next thing you know, 12 years in the city and then living, dying, retiring here sounds like a great idea. So to talk to you about Property Finder: Property Finder is the Zillow of the Middle East. We are a classified real estate marketplace connecting hundreds of thousands of listings of properties for sale with millions of home buyers, renters, and home seekers. We get more than 100 million sessions a year. What I do at Property Finder is I lead two business verticals. One is new projects, which is a new business vertical that we're building now, essentially building a new experience to better support home seekers in identifying, finding and connecting with the right off-plan or primary properties. And we also own and operate a subsidiary that is a full service mortgage company called Mortgage Finder. Yes, I know, original, but it works. I love it. We actually had Warren on. We have another podcast episode with Mr. Warren from Mortgage Finder sharing his first class human story. His story is amazing. He's the third ever mortgage lender in Dubai so he has seen the market from 18 years ago or however many years ago he's been here. His story was really incredible as well. Surprisingly, he still looks very healthy. He doesn't seem like a stressed out person, right? Yeah, he's very calm and collected. I know how he does it. He inspires me. He is so. Tell us about the transparency of the real estate market and how your business model serves that here in Dubai. Sure. Look, this is something that we've been obsessing over at Property Finder for many years to be honest. If anything, we were pioneers. We worked with the Dubai Land Department. I just saw Dr. leaving here. First class human too. We actually worked with the Dubai Land Department on developing what is called the Muasher Index. In a way we were a catalyst in the market and introducing transparency. We won't take the credit for it because naturally, without meaningful support and commitment from the government and the Dubai Land Department, which is quite a progressive government entity, as I'm sure you would have touched with Dr. Mahmud on this. So transparency is something we take very seriously and let me tell you why: the fundamentals of a marketplace are comprehensiveness, convenience, and trust. That means people come to Property Finder because, one, they're going to find every property in town or in the country in all the markets that we serve on our platform, on our app, or on a website. Two, convenience in the sense that we build a user experience that is going to accelerate their path to finding the right property. The third component, which is absolutely key and this is how we were able to solidify our market leading position, is trust. Without trust, there's no trade. Correct. Now we built essentially a tool within our platform called Data Guru where every listing on Property Finder has a lot of these elements that shows you price trends, that shows you community trends, that show you previous transactions and so on. You have valuation tools and there's a lot more coming up. This is a journey, it's a marathon not a sprint. But the effort is to constantly create that transparency and that trust. Your view and Dubai's view in general, 100 percent, right? The whole real estate market here in general and this is one of the most important topics that I am conveying to my American investors because many of them have not been here. They don't even necessarily intend on coming here but they want a piece of this action, which is a smart thing to do considering that this is the investment capital of the world. I'll tell you what, I can relate to your average American investor because ultimately I lived most of my life in the US before moving here. I was used to having that transparency, the MLS, public records and so on. When I first moved to Dubai in late 2011, 2012, I really struggled with the idea of buying a home because of the lack of data. I went through that journey. I remember I would speak to people in real estate and ask questions and find a really hard time getting those real concrete answers. So what I find is this accelerated shift that we're seeing into unlocking another dimension of transparency has been really exciting to a point where I became a homeowner finally in Dubai. Right? Because once you have that visibility, you're able to see previous transactions. You're able to understand what kind of rental yields that you're going to get. You're not just taking a broker's word for it or a developer's word for it. You're seeing the trend. 100 percent. And I'll tell you one more thing that I think is a super positive indicator. Naturally we work with every real estate agency in the country, right? What we're noticing that is very positive is the fact that real estate agencies are 100 percent on board with that level of transparency. Absolutely. They love it. We want it and we want it and I love seeing that. The practice or the industry if you like is getting elevated where now your professional real estate companies that we work with, they use many of our tools to help better educate their investors. Yes. That's a big win for everybody. It's a big win for the government for unlocking that open API and making that data available for us to process it and show it in real time. By the way, it is in real time. So it's no longer available to the privileged few who are able to see what's happening in the city. No, it is now available to the public. The speed at which we're able to collaborate with the guys at DLD and also the collaborative approach that we're both sharing, it's not a battle at all. Everyone's on the same page. Everybody's on the same page. We're all trying to tackle the same problem. And to a very large extent, we are all aligned on the solution. Yes. If you like, the public-private partnership approach whereby DLD relies on us and we rely on them, so it is a collaborative team effort. This is why I believe in the city. You have a regulator who is truly business-friendly, who is trying to solve a problem, not create a problem. Correct. There's not a lot of red tape. Everyone's on the same page. It's not politics involved and this is let's build this. So it is the real estate capital of the world, the way let's say Switzerland is for banks, Dubai is for real estate. And with 85 percent of expats and with ultra high net worth investors' eyes on Dubai and actually redirecting their investing from let's say the United States, which has really been negatively affected recently with being priced out of the market, the taxes of course, the profit margins, capital appreciation, such huge regulation on Airbnb, I mean Dubai is the place to invest your money. I've done business in probably seven or eight industries, right? Construction, real estate, banking, oil and gas, food, manufacturing and so on, with over 40 different countries across Asia, Europe, North America, Latin America, right? I have never interacted with a regulator who is as business-friendly as the UAE. That's why I'm a strong believer in the city. That's so profound and I feel pulled here and I feel so passionate to help demystify Dubai and help make it more accessible to those in America that have money and have an interest but maybe didn't have someone like myself to really help bridge and connect and introduce to people like you and help share the Dubai Land Department or the Master 2040 plan and just which developers to work with. So thank you for that and what you do is super cool. Thank you, thank you. Of course, it's definitely a journey. Looking back at 2023 numbers I've shared a lot of information but if you want to just give a brief overview, because I think it's more important to talk about moving forward, the records that were broken with regards to sales here and rentals as well. Has there been a record not broken in 2023? No. So yeah, I'll tell you what. Instead of boring your audience with numbers and percentages, I want to talk about 2024. Yes. I do. And that's a hot question. What is the forecast for 2024 and based on how successful 2023 is, should an investor be scared that 2024 it's going to all just crash and burn because it already rose too rapidly and it's already at a maximum? Yes. So to answer your question first, I won't make it boring. I won't throw a lot of numbers. It's not just 2023. What is significant about what we saw last year is it's a second double digit growth year in a row. By double digits we're not talking 11 or 12 percent. You have so many different metrics, right? You have metrics on home price appreciation. You have metrics on number of sales transactions. You have metrics on number of off-plan sales transactions. You have metrics on rentals. You have metrics on mortgage transactions. What I will tell you is growth in all of these metrics ranges anywhere between 15 percent all the way to 60 percent depending on which metric you want to talk about. That is unbelievable, right? And that is two years back to back, right? So that's a really big deal. Huge. Right now going into 2024, one would think and I wrote this in our first month newsletter where there's a lot of speculation saying momentum is going to slow down. Why? Because there are always people who maybe don't have as much depth in understanding our market or the real estate industry and it is a fair assumption. I mean, if one had to guess, right? Or if one had to gamble? Can a city grow double digit? Can it continue three years in a row? Like where does it go, right? I'm going to answer that. Please do. Or at least attempt to. Now, one of the reasons why the mortgage business of our business excites me is that what you see with DLD transactions, what you see with Data Guru, the tool that we have is a lagging indicator because you're looking at transactional data up until today. What we see in the mortgage business is a leading indicator because I'm seeing mortgage applications. I'm seeing submissions. I'm seeing mortgage transactions that have not yet been recorded. So we can see into the future. This is so extremely important. Drums. The momentum that I'm seeing when I look at the mortgage numbers is shocking, right? We are talking more than double year-over-year, right? In mortgage applications. It's truly shocking how accelerated this momentum is going into 2024. We're early in the year. I mean, we just closed a record number at Mortgage Finder in February. We're going to close another record number in March. So business is good. You know, team's doing an amazing job and this is the fruit of customer centricity. I think that's making a huge difference. We've been obsessing with the concept of customer centricity. I don't know another mortgage company that uses Google reviews as a performance metric that impacts the compensation of our team. For example, they're very motivated. We obsess with it. I read Google reviews every day, over coffee. So what I want to say is I don't want to deceive your audience by saying this is how the overall market is doing. Now, the overall market is growing double digits, right? What we see at Mortgage Finder is next level growth. What do you feel is driving that growth? I should say what do you know is driving that growth? Okay, so let's break it down. One, the big bad rental notice. Do you know what that is? No. Tell me, right? So in the UAE, a landlord is usually only able to increase rent by up to 10 or 15 percent every year using the rental index, okay? Which we help build. Wow. Okay, great. So however, a lot of landlords, because of that, it's not rent control so I don't want people to think of it as rent control. It's controlled rent increases. Okay. It's a different way of looking at it. It's always capped at somewhere around 15 percent per year. So if somebody had been, if a landlord has had a rental property with a tenant who's been in there since 2016, 2017, right? And with all of this crazy home price appreciation, somebody who bought a property in 2016, 2017 may have more than doubled in value in the past 7 or 8 years. So those landlords are now compelled to sell that property, cash in their returns, and then either look for another property, buy an off-plan property, or invest in a different city, go back home, whatever they want to do, go shopping, right? Go shopping in an entire spectrum or Mall of America or King of Prussia. I miss it. Rock. That place is way too chaotic for me. I like that place. I know every time I go there, it's usually with my friend. You miss that here. I just wander around Dubai mall for hours by myself. I put my ear plugs in. I love it. There's it's not just a mall, it's a whole world inside. The restaurants and the coffee shops and the aquariums. I need fresh air. Sorry. We do. So the big bad rental notice. What happened is a lot of those landlords, because they were compelled to sell their property and cash in their return, they send a rental notice, an eviction notice to their tenants, which is within their legal rights, but it has to be one year, right? It's one year. So they sent tenants. Many thousands, if not tens of thousands of tenants in Dubai have received a rental notice. Let's give you a real life example, okay? Right. Somebody who's now paying say $5,000 a month in rent or the equivalent of 5 to 6,000 a month in rent, right? They got the notice. Now they went shopping trying to find another rental property for a single family home, right? Within the same neighborhood, same specs or size or whatever. Able to find it? 8 to 10,000. Yeah, right. So what happened here is so many tenants were fed up with it and they said, you know what? I want to stabilize my housing cost. I want to stabilize my family with this. I'm going to buy a property. Makes complete sense, right? We built a rent versus buy calculator at Mortgage Finder and I'm a very big advocate for home ownership. It's to also help people, residents of Dubai, with pure common sense, numbers driven, it's not an opinion, it's factual. Look at the impact of buying versus renting, right? And in almost absolute terms in this city, it makes more sense to buy than rent. Which moves us on to the next one. Okay. Why is it making more sense to buy rather than rent? Because it is the only major global city that I can think of where your mortgage rates are lower than your rental yields. To break this down, mortgage rates are ranging from the upper 3 percent. Let's say 3.99 percent or 4 percent for residents. Yes, exactly. Residents, employed, salaried. A little bit higher if I'm an investor. Correct. If you're a non-resident buyer, it'll be closer to 5 percent. Yes. But which is still a lot less than the United States and Canada. In the US it's 6 and a half to 7 percent. If you're buying an investment property in the US it's more like mid-7s. Correct. Yes. Meanwhile, your rental yield in cities fine cities like San Diego, or San Francisco, New York, Miami and so on, your rental yields are lower single digits. We're seeing rental yields in upper single digits up into lower double digits. It's wild. I would feel more comfortable in saying, mid to upper single digits so 6 to 7 percent. Either way, your rental yields are higher than your mortgage rates so it makes a lot more sense to mortgage a property rather than rent. Three is, and having lived here for the last 12 years, and it's something that I'm personally so energized by and very excited about. In the past, people used to take what I call a transactional approach with living in Dubai. Explain please. Right now there's a shift to a relationship approach. Right now there's a big difference. A transactional approach is people who are coming here a year or two or three, making some money tax-free, and they're out, going back home. Yes, right. If you had asked an average person at a coffee shop right 12 years ago, how long have you been in Dubai? The typical answer would be 2 to 3 years, right? If you ask an average person now, try it. Go spend the weekend at Dubai Mall and ask 10 random people, how long have you been in Dubai? You're going to find the average has gone up to 7 or 8 years. People are staying, right? Not only are people staying, Dr. Zudi was talking about this. He's an official in Abu Dhabi. There's now a concept emerging of what they call expats who returned. So you have expats, right? Who came and lived in the UAE, right? Left and went back to Europe, US, Canada, Australia, spent a couple of years and said, take me back home to Dubai. Absolutely. Wow. There's another one. Okay. Younger. So the second generation of expats, expat kids who grew up here with the amazing weather and the malls and the F and B scene and the safety, the unparalleled safety and security of the city, safest city in the world. Yes. And then they went to, let's say, Europe, North America to university, right? They finish university and they say, we want to come back here. Which brings us into the fourth one: job opportunity. Our kids. So second generation expats are now able to find job opportunities in Dubai, right? Because every major international firm operates in the UAE. Meta has offices here. Google has offices here. Mastercard has offices here. IBM, Microsoft, McKenzie, PWC, EY, every investment bank under the sun, every hedge fund that I know of, and then you have the local scene. You have major industrials in food and beverage, aluminum and so on. So you have an overactive, thriving construction and real estate development industry, clearly, right? And then you have local technology startups that are now, you know, quite a few unicorns, right? So it's not just Property Finder, right? We even have an employer culture that has evolved a lot. We were just awarded best place to work. Wow. Congratulations. We did great place to work two years in a row and now we got best place to work. That's fantastic. Thank you. And we take it with so much pride but it's not just us, right? There's so many of our peer homegrown tech startups, which is super appealing to Gen Z, right? We're offering these hybrid work environments, these healthy, well-governed work cultures and so on, right? So what did we say so far? We said one, the rental notice, right? That has been driving a lot of local demand from renters, okay, right? Two, the economics of buying a property are making more sense in Dubai than renting, right? Right. Three, you have all of this economic growth, right? I was just reading a piece in the news earlier today where Dubai is ranked the most stable global economy, right? And naturally, the Dubai and UAE's approach to geopolitics is unique in the sense that this government exerts a lot of what we call soft power, right? In a very classy, subtle, intelligent way that maintains that stability, which is super important. So people believe in that stability in the city, right? And then another one is the golden visa, right? Which has even become, now it's continuously progressing and becoming easier to secure a golden visa to be able to stay here. For example, right now before, you had to have actual physical possession of the off-plan project, but now it's a 2 million Dirham value and once you've paid a million, you can start that process for a golden visa. That minimum is actually gone lower now. Oh wow. So the minimum threshold is now even below a million, okay? Check with Dr. Mahmud. I will. I don't want to think that. And that's the thing. It's constantly becoming more attractive to create this perfect city of the future. I call it a Utopia, in fact, that's what I call Dubai. You see the little signs that you see when you go into Dubai Airport? Welcome to the world's happiest city? No. I didn't see that. No. But I want to point that out. Every time I come, I take a picture and send it to my family. So cool. Yeah. So those are the five main drivers that you see, and transparency. So transparency, I'm going to cap with transparency. Please do because for an international investor, to have in my opinion the most seamless experience in buying an international property, like if I want to buy a property in Spain, Spain or Italy or even the US, right? It's a pain. Without a doubt. I mean I've been wanting to buy a property in Italy since I was a little girl but how? Well, good luck buying a property in Egypt while we're living here for example, or Syria. Exactly. But here, you can, right? You're probably working with your clients sitting in, say, San Diego, and they haven't even been here. They haven't even been here and they don't have to come here and they're already appreciating that capital appreciation. But you might want to ask yourself, I'm sure you've asked yourself, those people spending millions of dollars or hundreds of thousands of dollars buying properties in the middle of the Middle East, right? Why? And the real answer is trust. Had it not been for that commitment to unlocking that level of transparency and data, where your buyer can be sitting in their beautiful backyard in the city of San Diego, right? And they're looking on the Property Finder app, going through Data Guru and then able to learn everything they need to know, correct, about whenever somebody asks me actually, which neighborhoods or which cities I should look at, I wouldn't want to touch upon that with you. Should we look at and what has performed well? I automatically send them to you and I said, don't take my word for it. These are, I can give you the bullet point answer, but don't just take my word for it. Go to Property Finder. See what's been happening in these neighborhoods. See which ones have performed well. You're the reason we've been getting a lot of traffic from the US. From the US, because I track it. I track traffic. I'm like, are Americans really looking at buying? I'm concerned. Yes, they are. And yes, we have been selling. I have been selling and I've been very happy. Thank God it's been a really quick anecdote. I so when I lived in the Bay Area I truly believed that Palo Alto is the center of the universe. We all do in America. We think where we live is unique. I don't know what it is, whether it's ingrained in our brains. Yes, and it's Palo Alto, right? It's the intersection of University Avenue and Sand Hill Road, right? Venture capital, startups, Google, everybody's there. Yes, that's true. So when I was in Palo Alto, this was this summer or last summer, and I think it was last summer, I was having lunch with a friend, right? And he randomly asked me, so how is Dubai? And then like three people sitting at tables around us were like, wow, you live in Dubai? Tell us more. We're really interested. We want to see, is it safe? I said, yeah, it's safer than Palo Alto, or no. I don't want to pick on Palo Alto. I love Palo Alto. But safer than anywhere I can think of, yes? Yes. Really safer than absolutely any city I can think of, well, can my wife come? Yes, why not? Can she drive? Yes, are you sure you want to bring your wife? I started messing with them like, so when you go to Vegas, do you usually ask, can my wife come? Yeah, of course she can come. So yeah, yeah. There is a lot of interest and there are a couple Netflix shows actually that are in the United States right now that are about Dubai. So that's created this mystery. And that is my goal. My goal is to demystify Dubai through my eyes as a first generation Arab American with offices both here in Dubai and in San Diego. I was born in Detroit but I was raised in San Diego, educated at UCSD. I myself had no desire to come to the Middle East because of my own preconceived notions. But once I finally got on the plane and came here, every preconceived notion was completely gone. And I am pulled here. I am just, I feel this pull. Have you moved yet? Well, I mean, last time I was here for 7 weeks and I don't even have my return flight booked, right? So I haven't moved here yet. I'm waiting for my son to find out where he's going to college and my husband and I are looking to potentially relocate here. So what I would really really love for you to do with your audience is it's not just about encouraging people to buy property in the UAE. I would love to see a world where more and more Americans are moving to the UAE, right? The tax benefit that you get here, I mean, unfortunately US citizens, we have to pay taxes, but there's a quite substantial exemption, right? And also you don't have property taxes here, right? You don't have capital gains tax. Capital gains tax, property taxes. Yes, definitely. And even your income tax here, you have a certain amount that you can make. There's like the first hundred and some thousand, I'm sure you talk to tax people. And then you have the housing exemption. So quite a substantial amount of your income will not be subject to taxes. Put these practicality. Why do I love this city, right? And why would I encourage every American under the sun to explore living here, right? I've been fortunate to travel. I did the math the other day. I think 72 cities in my life. Wow. This is the one and only city on the planet that I feel gives each and every single person an equal opportunity to live your identity to its fullest. You can be as American as you want to be in the city. You can be as English as you want to be. You can be as Arab as you want to be, as Australian as you want to be. And you see that in food, in culture, in openness. And also, I have many friends with the local Emirati community. There's so many myths that need to be broken, right? The locals are so welcoming of expats in the UAE. They genuinely love having us here, right? You don't feel like a stranger. Everybody's welcome. Nobody bothers you. Everybody respects you. It's a happy city. You read our press. There's hardly ever any bad news. It's a great place to raise a family. It's a great place to be. My elderly parents live with us. They're 83 and 87 and they absolutely love it. Kids schools are fantastic, right? The weather is amazing. Beaches, bars. Why would anybody not want to move here? So all I would say is I would very strongly urge your audience to say, hey, if you haven't thought about it, come join us at Property Finder. We're always hiring. We're always looking. Good to know, right? Definitely. Yeah, the job growth, the GDP growth, the opportunities here, the lifestyle, the diversity, the harmony, the safety, the welcomeness. You can't completely be American because I can't cuss anybody out when they're honking behind me in the car. It's illegal. It's illegal. But actually, when you come here, you don't want to get kicked out so you play by the rules. You have to be respectful. Living in a city where respect and politeness is a law, that's profound, right? You can't even make, for example, a comment about someone's race, color or religion here. You cannot make a derogatory comment. That is not allowed. Or send a WhatsApp message. Yes. So imagine that. Just that, and of itself. Because people will say, oh, it's a religious country. Okay, it is a religious country. However, all religions are respected and welcome. I used to feel more comfortable making borderline racial comments in the US than I do here. Yeah, because you're not going to get in trouble in the US. I remember I had an African-American friend at university who said, bro, you get to be an equal opportunity offender. And I said, what's that? He said, you get to be an equal opportunity offender. And I'm like, so I can say things about your race, your color, your religion, and you can say things about my race, color and religion and neither of us is going to get in trouble. But that's not fair, is it? Right. Yes. But no, you're right. Here, it's totally socially unacceptable. It's legally unacceptable. That's a really beautiful misconception as well that has been broken in my own eyes coming here. And what I have seen and as a woman in business, how respected I feel here and how empowered I feel here and I absolutely agree with you. All it took was one night in Dubai. One visit here. Between that, my whole life was changed. And being able to meet and connect with people like you and continue to open the minds of Americans and tell them to come to Dubai. Habbi, come to Dubai. So with that, I want to thank you for your time and your expertise. Property Finder is an excellent source. Make sure to like, subscribe and follow and stay tuned for this is season two of the Dubai Connect podcast.