The Risks of Buying Property in Dubai

Around 120,000 units are scheduled for handover in Dubai in 2026, one of the largest pipelines in the city's history, per Fitch via The National. Scheduled is not delivered: completion rates in Dubai have historically run well below schedule, with Knight Frank and Moody's estimating real delivery near 46% to 48% and one recent quarter landing at 41%, which points to actual 2026 completions closer to 33,000 to 50,000 units. Both numbers matter. The scheduled figure tells you where the pressure is aimed. The delivery rate tells you it arrives slower than the headlines suggest, and arrives all the same.

Supply on that scale does what supply always does, and the market is already showing it: rents fell roughly 6.7% across early 2026, with prime areas off around 15%, per Q2 2026 market reporting. Values tell the same two sided story. Q1 2026 residential prices fell 3.8% quarter on quarter, the first quarterly decline since 2020, with a partial rebound in April. Full year 2026 forecasts range from roughly +1% at Knight Frank to −7% at S&P. Anyone quoting you a single confident number is selling something.

The pressure does not land evenly. It concentrates where the cranes are: volume apartment districts with deep off plan pipelines, sold heavily to investors who will all be seeking tenants in the same quarter. Prime locations with constrained land and established communities where nothing new can be built behave differently, because their supply is fixed while the city's demand keeps arriving. If the unit you are considering competes with 5,000 identical units handing over in the same district in the same year, its rent and its resale price are set by that fact, not by the brochure.

Off plan projects are delayed. Some are cancelled. Some developers have failed. None of this is rare enough to ignore.

Dubai's protection is the escrow system, and it is worth understanding precisely. By law, buyer payments on off plan sales sit in an escrow account regulated by the Dubai Land Department, released to the developer only against verified construction progress. Escrow protects your staged capital against misappropriation. That is all it protects. It does not guarantee the handover date. It does not guarantee the build quality. It does not guarantee the market value of the finished asset.

Where a project is formally cancelled, RERA winds it up and buyers are repaid from the escrow account. The mechanism works, and it can still take years, during which the capital earns nothing and buys nothing.

Buying costs 6% to 8% of the purchase price once the 4% DLD transfer fee, agency commission, registration and trustee fees are counted. That number sets the arithmetic of exit. A sale inside two years rarely recovers the entry cost through capital growth alone. Dubai suits a buyer with a three year minimum horizon and no requirement to access the capital on demand.

Time to sale is the other half of liquidity. In a strong market, well priced stock sells in weeks. In a soft market, months, and the first offer often arrives below asking. Off plan positions are less liquid still: developers commonly block resale until 30% to 40% of the price has been paid, and the pool of buyers for a part paid contract on an unbuilt unit is the thinnest corner of the whole market.

If there is any scenario in which you need this capital back at short notice, property in Dubai is the wrong place for it.

"Zero tax in Dubai" is a true statement about UAE tax law and a misleading statement about a UK resident's total liability. The UAE will not tax your rental income or your gain on sale. The United Kingdom will.

• A UK resident pays UK tax on worldwide income on the arising basis. Rental income from a Dubai property is declarable to HMRC through self assessment.
• HMRC has invested heavily in offshore income detection since 2017 through automatic exchange of information. It does not rely on you volunteering. Undeclared overseas rental income attracts penalties, interest, and offshore tax geared penalties on top.
• From April 2025, UK inheritance tax is assessed on a residence basis rather than domicile. A UK resident's Dubai property may fall within the UK IHT estate.
• Capital gains follow the same logic. The UAE will not tax the gain when you sell. A UK resident is assessed for UK capital gains tax on worldwide disposals, and the gain is computed in sterling, which means the exchange rate movement forms part of the taxable gain or loss.
• The UK and UAE hold a double taxation agreement. It prevents the same income being taxed twice and settles questions of residency. It does not remove the UK's right to tax a UK resident's worldwide income.

An advertised gross yield is not the number that reaches your bank. Between the two sit costs that the advertisement does not mention:

• Service charges, levied per square foot, every year
• Chiller charges, billed separately where district cooling applies
• Community and master community fees on villa plots
• Sinking fund contributions toward future major works
• Management fees where the property is let from the UK
• Void periods, which arrive on schedule in an oversupplied district. Rents fell roughly 6.7% across early 2026, with prime areas off around 15%, so a yield computed on last year's rent is already stale

Walk an advertised 8% gross down, as a share of the property's value each year:

The deductions above are illustrative and vary by building and community, which is exactly the point.

A guaranteed rental return is a fixed payment made by the developer or the seller, usually for a defined period of one to three years. It is not a yield. It is a marketing instrument, and it is usually funded from the purchase price you paid.

The mechanics are simple. The headline price is inflated above market value. The premium funds the guaranteed payment schedule. The advertised return was never supported by market rent, and when the guarantee period ends the property earns whatever tenants will actually pay, which may be materially less. The buyer financed their own guarantee and paid for the privilege.

RAF does not sell guaranteed return products. You can identify one in the wild: a return promised by the seller rather than evidenced by the market, a price above comparable units in the same building, and a contract in which the payment obligation ends precisely when the market takes over. Walk away from all three at once.

The AED is pegged to the US dollar. A sterling buyer is therefore holding a GBP/USD position for the life of the asset, whether they intended to take one or not.

Rental income arrives in a dollar pegged currency and is spent in sterling. Capital is repatriated at whatever the exchange rate is on the day of sale, not the day of purchase. A strong dollar flatters the returns and a weak dollar erodes them, independently of anything the property itself does. Over a five year hold, the currency move can be larger than the property's entire net rental return, in either direction.