Property investors and expats are attracted to Dubai and London because both countries remain unmatched when it comes to lifestyle and property investment. These countries rank among the top due to their vibrant lifestyles, global appeal, and strong real estate markets. Dubai is one of the most advanced cities, popular for its favourable tax policies, long-term residency visas, strong capital appreciation, and extensive returns on investment. On the other hand, London also extends stability, capital appreciation and global prestige.
Property investors normally seek high returns on investment, a favorable business environment, long-term appreciation and legal security to ensure they are making profitable choices. Though both London and Dubai are deemed popular real estate investment destinations but it is required to compare price trends, rental yields, ROI potential and overall real estate market climate of both cities before considering a city for real estate investment.
If you are looking for a suitable real estate investment destination then keep reading this blog to explore factors such as ROI potential, tax system and price trends of London and Dubai to make a decision that suits your specific real estate investment objectives.
Market Overview: Dubai vs London Real Estate in 2024
Dubai’s property market observed significant growth in 2024. 168,407 units were sold in Dubai in the last year which is around a 42% increase from 2023. According to data, the demand for both off-plan properties for sale in Dubai and ready properties has risen sharply in recent years. Over 25000 new units were completed in the last year. Even a large number of villa and townhouse communities are observing more demand than supply. In addition to that, mortgage activity or home financing has also increased significantly, reflecting the growing interest of property investors.
When it comes to London, its real estate market remained steady in 2024, highlighting modest growth overall. Prices of properties are also increasing gradually showcasing strong ROI potential and notable capital appreciation potential. 2% property prices grew in London in the last year. A notable surge in real estate activity had been observed during Q3 as a whooping 33% increase in annual net sales was noted in Q3. Furthermore, 37% increase in transactions of homes valued between 50000 pounds and 1 million pounds which is considered the outcome of improved interest rates.
2024 has been a year of growth for both real estate markets. Investors move to these cities to capitalize on their offerings. It is not easy to ignore the growing interest of investors in Dubai and London property markets. However, the property sector of Dubai reflected massive growth.
Price Trends: Cost per Square Foot
Dubai is known for offering more value against money than London because prices of real estate are comparatively low in Dubai as compared to London and other cities like New York and Singapore. The average per square foot price in Dubai is $438 while an average per square foot price in London costs 582 pounds. No doubt, London extends long-term value but Dubai comes with low entry cost.
Rental Yields & Income Potential
In terms of rental yields, Dubai outperforms many cities including London because the average real estate investment yield in Dubai is 5-7% based on the type and location of a property while the average rental yield in London remains somewhere between 2 and 4%. Popular areas such as Dubai Marina, Business Bay and JVC generate even higher rental yields mainly because of affordable property prices, growing demand for real estate and increasing tourism.
The short-term rental market is also strong in Dubai as some areas are roughly yielding 10% or even higher returns. It means if you invest in a premium neighborhood in Dubai then you might expect 10% or even higher returns. London also offers short-term returns because of its strong and stable tourism sector. However, the ROI in London is lower than that of Dubai.
Tax Environment & Ownership Benefits
Dubai is also popular because of its tax-free environment because there is no income tax, annual property tax and capital tax in Dubai. It means Dubai offers significantly higher returns on investment. What you earn is yours and the government does not charge anything which translates into a higher return on investment. Furthermore, Dubai also offers 100% property ownership rights to foreign investors. People who purchase real estate in freehold areas of the city can enjoy exclusive property ownership rights.
Property investors can also take advantage of long-term residency visa options by investing in the property sector of Dubai UAE. People who purchase property or properties worth AED 2 million can even apply for a 10-year-long renewable residency visa called the Dubai Golden Visa.
The tax burden in London is significantly high. Property investors are bound to pay capital gain tax and income tax on rental earnings. Furthermore, expats are also required to pay a non-resident 2% surcharge which further reduces net return on investment. However, investors normally benefit from the stable real estate market of London, UK and its strong legal protections. The city’s strong legal system keeps it a secure place to consider for real estate investment because of a secure and protected real estate environment.
Investor Benefits & Risk Factors
A wide range of investment benefits makes Dubai a highly attractive real estate investment destination. In the first place, the government has introduced and implemented clear rules and regulations to protect the interest of every party. Along with a transparent regulatory framework, this city is also known for its business-friendly environment, modern infrastructure and a wide range of residential and commercial investment opportunities. Tax-free income, high rental yields, freehold properties, off-plan properties for sale in Dubai and comparatively cheaper luxury real estate enhance the captivation of Dubai’s property sector.
London, on the other hand, also offers stability and legal protection to property investors. Investors who seek long-term gains also prefer London because the prices of properties also rise gradually. Though property investors are bound to pay taxes which also lower the ROI ratio, London is still considered among the best places for real estate investment.
Market Forecast 2025: Dubai VS London
Factors such as population growth, government initiatives,, strong demand for all kinds of real estate, visa-linked property investment programs such as the Dubai Golden Visa, property ownership rights for foreign investors, off-plan real estate, flexible and attractive payment plans, improved regulations and high ROI highlight that the property sector of Dubai is expected to maintain its upward momentum in 2025 and beyond.
London’s real estate market is also expected to observe modest but stable growth. Improved mortgage conditions, a strong legal system, the element of prestige, long-term growth potential and growing transaction volume also reflect the stability of London’s real estate market, making it a secure and solid real estate market.
The Bottom Line:
Both Dubai and London are considered popular real estate investment choices because of their unique advantages. Dubai offers affordable entry prices because of lower per-square-foot prices, tax-free income, high rental yields, property ownership rights and attractive payment plans which make it a preferable place for real estate investment. People who seek short-term or long-term gains can choose to invest in Dubai because this city is designed to deliver significant value. London also appeals to people who seek long-term capital appreciation. This city also offers legal security and a mature property market for investment.
Expert Support For Buying Real Estate In Dubai!
Kelt and Co Realty is a prominent real estate agency in Dubai. This property company helps people buy, sell and rent all types of residential and commercial properties. If you desire to purchase and own property for sale in Dubai then our real estate professionals can guide you in finding your dream property and making a prudent investment decision. At Kelt and Co Realty, we believe in delivering value and meeting the expectations of our clients.
FAQs
Is Dubai or London better for property investment?
Both cities are considered among the best choices for real estate investment. Dubai offers high ROI, tax-free income, lower property prices and also property ownership rights. On the flip side, London extends long-term stability and strong legal protections.
Why is Dubai real estate more tax-friendly than the UK?
There is no income tax, capital gain tax and inheritance tax in Dubai. In contrast, property investors are bound to pay all types of duties and taxes in London, UK. Dubai’s tax relaxations make it more tax-friendly than the UK.
How much ROI can I expect from Dubai real estate?
Dubai is also popular because of its significantly high return on investment. If you invest in Dubai’s property sector, you can expect roughly 6 to 9% ROI. This percentage can even go higher for properties located in key neighborhoods of the city.
Is it safe for foreigners to invest in Dubai?
Yes. It is safe and secure to invest in Dubai’s real estate market. Foreigners can invest in Dubai’s property market and even own all types of residential and commercial properties because Dubai extends 100% property ownership rights.
