International Investment

INVESTING IN DUBAI FROM SWITZERLAND

SWISS INVESTMENT INTO THE DUBAI PROPERTY MARKET

Swiss investors and developers have entered the Dubai property market at an increasing rate in H2 2023.

It’s a trend set to continue, with the Dubai property market currently well-positioned to outperform nearly every other major real estate market in the world.

The influx of investors from Switzerland has been instigated by the world-leading ROI offered in Dubai since the pandemic and the subsequent maturity shown in Dubai real estate’s third market cycle.

PROPERTY INVESTMENT IN SWITZERLAND AND THE MOVE TO DUBAI

The latest data on the performance of real estate in Switzerland shows investors can achieve around a 4% annual increase in capital values. This is very strong compared to most other European markets over the same period.

However, Swiss investments have also been impacted by the wider economic slowdown seen in most of the Western world, and the Swiss market is still heavily interlinked to interest rates.

Many investors from Switzerland are now choosing to forgo the decline seen in domestic real estate and diversify elsewhere, including the lucrative destination of Dubai.

SWISS INVESTMENT IN DUBAI REAL ESTATE

The performance of Dubai properties over the past three years has made headlines around the world, and it is no surprise that investors from Switzerland are increasingly familiar with the investment stats and headwinds:

Averaging double-digit annual capital rises since 2020.
Dubai-based real estate companies expect to maintain stability with solid cash flow, steady profits, and better credit metrics.
Dubai’s GDP is set to grow by 3% in 2023, accompanied by around 3% inflation, while the population will increase by 3%-4%.
High oil prices will buoy investor confidence in the GCC, and international tourism will continue rebounding from the 2020 slump.
Global economic pressures, such as increasing interest rates, inflation, and the devaluation of emerging currencies, favour the Dubai market.
Developers have strong revenue prospects for the next few years, courtesy of robust revenue backlogs resulting from robust presales in 2021-2022.
Operators anticipate increased foot traffic and international visitors, though potentially reduced spending due to economic conditions does pose a risk.

This macroeconomic climate is seen as particularly appealing for Swiss investors and developers, and investment activity between the two nations has seen a marked uptick in 2023.

WHAT DO INVESTORS FROM SWITZERLAND NEED TO KNOW ABOUT DUBAI PROPERTY?

Dubai’s real estate scene has shifted significantly, catching the attention of Swiss investors. The market has matured and become more robust, backed by strong macroeconomic trends and noticeable supply-demand imbalances. Previously, it went through cycles of booms and busts, drawing speculative investors from many nations, but notably, many from Switzerland placed their Francs elsewhere.

This reluctance was particularly notable during the first cycle – the Gold Rush era – where, despite some monumental appreciation spikes, only a few investors from Switzerland purchased property assets in Dubai.

Over the past 20 years, both the Dubai landscape and Swiss attitudes towards it have changed significantly.

It is now seen as one of the world’s most regulated and transparent markets – as well as one of the most popular with global investors.

Investors now enter the market not on speculative assumptions, but forecasts backed by hard data and evidence of a strong and diverse economy.

It’s no longer just capital appreciation that drives ROI, either. Given how Dubai has evolved to become a global business and commerce hub, its growing population and appeal to young workers from all over the world are resulting in high yields.

The current market in Dubai presents strong rental yields, which is particularly attractive for Swiss investors seeking recurring extra income. While prime property in Zurich and Geneva realise yields of around 2-3%, most submarkets in Dubai offer 7%.

ECONOMIC AND INVESTMENT TIES BETWEEN SWITZERLAND AND DUBAI

Dubai does share a few similarities with Switzerland – particularly in the eyes of the broader investment community. Switzerland’s reputation as a top-performing financial destination stems from its strong economy, financial services, lenient taxation, and political neutrality – traits also found in the UAE.

Adopting the Swiss model has enabled the UAE to increase its influence and outperform other economies. In 1973, the UAE had a GDP of just USD 2.85 billion. Through strategic planning and growth, the landscape transformed drastically. By the turn of the millennium, GDP surged to approximately USD 105 billion. In 2022, it reached a remarkable USD 507 billion, a staggering 177-fold increase from 50 years ago.

SWISS DEVELOPERS ENTER THE DUBAI MARKET

In the summer of 2023, Fortimo, a renowned Swiss property developer, introduced its precision and expertise to Dubai through its inaugural residential build-to-buy project, The Golf Residence, in collaboration with local partners Eaglewing Projects and OCTA Develop.

Quickly following in Q4, DHG Properties, a renowned Swiss property developer, launched its flagship project, Helvetia Residences, in Dubai’s Jumeirah Village Circle (JVC). This off-plan residential development will provide a premium but affordable housing option to investors and end-users alike.

DUBAI FREE ZONE APPEALS TO SWISS INVESTORS

In a bid to fortify the robust USD 21 billion trade partnership between the UAE and Switzerland, a prominent Dubai free zone toured Switzerland in September 2023.

The DMCC‘s inaugural Made For Trade Live roadshow visited key Swiss cities, Geneva and Zurich, showcasing business opportunities to business leaders.

Teaming up with established entities like the Swiss Business Council UAE, Swiss Group, Geneva Chamber of Commerce, Industry, and Services, and the Arab-Swiss Chamber of Commerce and Industry, DMCC showcased the emirate’s seamless business landscape to Swiss businesses eyeing international expansion.

Ahmed Bin Sulayem, Executive Chairman and CEO of DMCC, emphasised the flourishing bilateral trade, citing the UAE as Switzerland’s pivotal Middle Eastern trading partner. With over 400 Swiss enterprises already thriving within DMCC’s free zone, Sulayem underscored DMCC’s role as the preferred destination for Swiss multinationals and SMEs, acting as a significant catalyst for bilateral trade and investments.