Anyone who is reading this from Johannesburg, Cape Town, Durban or Pretoria will already know why South Africans have begun to look elsewhere for their investment money. The rand has had a difficult decade, power outages have become a regular entry in household budgets for many years, and crime figures have started to appear in conversations which used to be about school fees and retirement arrangements. All of this is nothing new to people who have experienced it.
Recently the main point that has changed is the destination of that capital. More and more South African investors, entrepreneurs, professionals, and high-net-worth families have been directing their money into property in Dubai, not as a speculative move, but as a deliberate way of hedging against the very risks they are trying to escape at home.
The Push Factors Are Local, the Pull Factor Is Dubai
It is important to be honest about the reasons for this change rather than conceal them. South African investors are not abandoning the local property market because Dubai has a more effective marketing team; they are reacting to genuine and particular problems, such as currency depreciation which gradually diminishes wealth measured in rands, the political and economic uncertainty which makes long-term planning more difficult, and the general feeling that too much of the household balance sheet is dependent on the economic situation in one country.
Dubai deals with all of those concerns in a fairly direct manner by having a currency linked to the US dollar instead of one susceptible to volatility in emerging markets, by providing a tax system that includes no capital gains tax or annual property tax, and by offering a degree of political and economic stability which is now genuinely rare to come by in one package.
What’s Actually Driving South Africans to Dubai Specifically
A Hedge Against Rand Volatility
By holding an asset which is priced and traded in AED and which is linked to the dollar, South African investors gain exposure to movements other than those of the rand. This is not a move against South Africa, but rather an attempt to ensure that not all of the assets an investor holds rise and fall at the same time.
Returns That Outperform Local Alternatives
The rental market in Dubai has always provided high yields in well-established areas and, when the costs involved are taken into account, has usually beaten what South African investors achieve on domestic rental property, especially when maintenance, rates, and the actual difficulty of managing tenants from a distance are considered.
Easier Than It Sounds From Johannesburg or Cape Town
It is here that a great many investors from South Africa unnecessarily hesitate. Since there are direct flights available from both Johannesburg and Cape Town, it has become genuinely possible for people to visit the site, and the purchase process – including virtual tours, e-signatures and international transfers – is now simple enough that in many cases the buyer has no need to travel at all. Furthermore, financing is often available to non-residents, so paying in cash is by no means the only way.
A Golden Visa Attached to the Purchase
It’s this point that usually leads clients to make their decision. If a person invests in property in Dubai above a certain amount, they become eligible for the UAE Golden Visa, which provides long-term residency for the entire family as a result of the purchase rather than having to go through a separate application. We explain in our guide on the [UAE Golden Visa obtained via real estate investment](/blog/uae-golden-visa-real-estate-investment) exactly how the thresholds and the process function. For South African families considering international schooling or looking at an alternative plan outside the country, the residency benefit is often just as important as the return on investment itself.
One Thing to Plan Around: South Africa’s Exchange Control Rules
It should be dealt with directly rather than ignored, as it is the only aspect which is truly specific to South Africa. Residents of South Africa are covered by exchange control regulations which specify the amount of capital that can be transferred offshore each year without needing extra approval. People who are serious about buying a property in Dubai should obtain appropriate advice from a financial adviser or a tax professional on how to properly arrange the transfer before deciding on a particular property, since making a mistake at this stage might delay or complicate an otherwise simple purchase.
Part of a Wider Pattern
South Africa is not going it alone when it comes to investing in Dubai. This same basic reasoning has been observed in the case of [Zimbabwean investors in the UK and South Africa](/blog/dubai-real-estate-zimbabwean-investors), [Kenyan investors](/blog/dubai-real-estate-kenyan-investors), and [Sri Lankan investors in Australia](/blog/dubai-real-estate-sri-lankan-investors-australia): since their domestic markets have become more difficult to plan for over the long term, they are looking for a destination that offers verifiable ownership, currency stability, and returns that can withstand real examination. The fact that South African investors are so noticeable is merely because they are one of the more visible elements of a much wider trend of diaspora and cross-border investment into Dubai.
What This Looks Like in Practice
When we talk to our clients in South Africa, the question they usually ask is this: what proportion of my capital should be invested and what purpose should it serve? After that, we focus on matching the investment to the client’s goals, their income, the potential for appreciation, or a future plan to reside there, and we shortlist the appropriate developments by referring to actual performance data not just to the attractive material in brochures. The reason is that since we work directly with the developers, we can make our South African clients aware of off-market inventory before it is made available to the general public.
Frequently Asked Questions
Can South African citizens purchase property in Dubai while residing there as foreign nationals?
Yes, South Africans are able to buy property in the designated investment areas of Dubai with full ownership rights, just like most other foreign nationalities.
Is it necessary for me to go to Dubai in order to carry out the purchase?
It doesn’t have to be that way. A great many transactions are carried out remotely using virtual tours, digital signatures, and international transfers, but it is advisable to make a personal visit before deciding on a particular unit.
What effect does South Africa’s exchange control have on the purchase of a property in Dubai?
Since South Africans have annual limits on offshore capital transfers without having to obtain extra approval, it is important to consult a financial adviser or a tax professional before finalising a purchase.
Will this investment result in my family obtaining residency in the UAE?
Yes, if you and your immediate family exceed the qualifying amount you will be eligible for the UAE Golden Visa, a long-term residency permit which can be renewed.
Is it possible to get financing from South Africa?
In numerous instances, yes. Several banks in the UAE do provide non-resident mortgages, the loan-to-value ratio generally being up to about 50%, according to the buyer’s financial situation.
Are you ready to look at your options?
If you are in Johannesburg, Cape Town, Durban, or indeed anywhere else in South Africa and are looking to find out what actually suits your objectives, we will be pleased to go through the present market with you.
Start by speaking to an advisor.