The year 2020 is one for the history books. This is the year when a global pandemic changed the world, in many ways permanently. It is the year when outrage over societal inequality reached a boiling point. And it will also be marked down as the year when the first seeds of peace were sown in the midst of a longstanding regional conflict. Just over two weeks ago, the UAE announced the signing of a peace treaty with Israel, which came to be known as the ‘Abraham Accord’. Could this signal a new era for the Middle East?
We should preface this by saying that we are not political pundits. We cannot say how policies will change or what the broader impacts of this historic agreement will be across the region. However we can speak to the potential economic effect, especially in light of the fact that the announcement of the Abraham Accord was followed by the dissolution of a decade’s old law that banned trade with Israel. Healthcare, finance and energy are among the sectors in which the two nations can work together and reap mutual dividends, and indeed agreements are already being drafted up. But there are two industries in particular that can benefit from this partnership - tourism and real estate. In fact, there is a very good chance that this partnership could breathe new life into the UAE real estate market.
Real estate is a key contributor to the UAE economy, providing roughly 5.4% of GDP at a value of AED 80.2 billion, according to the latest data. Looking at Dubai alone, that number goes up to 7.4% of GDP, or AED 15.5 billion. It is perhaps no big secret that there has been an imbalance in the supply and demand of properties in the UAE since roughly 2012, with more units available than there are buyers. While the market has shown signs of stabilising during individual quarters, it has continued to soften gradually. The impact of COVID-19 has led to a further softening of prices this year, which in turn has created plenty of opportunities for the savvy investor. Without a doubt there will be several investors in Israel who would be looking for just such an opportunity, and this would be the perfect time for them to capitalise on it. The end result, as we see it, is a win-win.
Even as the finer details of the accord are being finalised, there is already buzz among investors in Israel. According to international property firm Beauchamps Estates, which has a division in Tel Aviv, several enquiries have already come in about investing in the UAE. As soon as trade agreements are finalised, with all the i’s dotted and t’s crossed, it is believed a significant volume of transactions may start taking place.
And what better place to invest than in the UAE? We have waxed poetic about the many advantages this country offers, and especially the vibrant emirate of Dubai. The city is one of the safest in the world, boasting some of the highest levels of personal security, along with a responsive and highly efficient law enforcement division. As the COVID pandemic began sweeping the globe early this year, the UAE went into action immediately to contain the situation and has been widely praised for its ability to keep things in check and for its extensive testing protocols.
In addition you have the benefit of a mostly tax-free lifestyle, with only a 5% VAT applicable to certain purchases (and residential real estate largely exempt from that). While some of its neighbours looked at increasing their taxation to combat the economic effects of COVID, the UAE held its ground, trusting that the economy would weather the storm.
There is also the incredible breadth of living options you have in the city, whether you are looking for a lavish villa by the beach, a cosy low-rise apartment in a green family neighbourhood, a house overlooking the golf course, or a chic penthouse in the central business district. No matter what sort of life you wish to lead, Dubai has something to offer for everyone.
Though perhaps one of the major factors of life in Dubai, and one that will undoubtedly be appreciated by visitors from Israel at this time, is inclusivity. Tolerance is one of the cornerstones of life in the UAE. It was one of the principles that the nation’s founder lived by, and one that has been passed down through the generations of its leadership, resulting in a true melting point in which diverse cultures come together. The city is home to temples, mosques and churches alike, and will soon welcome its very first proper synagogue.
Israel has been a thorny topic in the Middle East region and by extension, across the world. The signing of the Abraham Accord will hopefully be another building block in the efforts to resolve the protracted conflict. How it will ultimately play out, we cannot say. But as approval comes in for the first commercial flight from Israel to the UAE, we are confident that the economic outlook is bright. And as Israeli investors turn their eyes to Dubai, we will continue to do what we do best - provide top-class advisory on the best investments in luxury real estate.