Hong Kong vs. Dubai for real estate investment

Let's measure up which city offers more value in terms of real estate.

02 Jul 2018, words by Aneesha Rai in The Guides

Hong Kong vs Dubai to invest in property

Stuck on whether to invest in Dubai or Hong Kong? Here's a balanced perspective on things to look out for before you decide to invest in either city.

Hong Kong

1. High demand, low supply

While Hong Kong has way smaller apartments that Dubai does, the geographical limitations for the city results in an extreme number of high rises and a smaller number of apartments. With the population rising, it's important to note that the return on investment in Hong Kong will be higher as there is currently lower supply, specifically in terms of capital appreciation.. Hong Kong consistently ranks the no.1 spot for real estate in Asia, even beating metropolitan cities such as Shanghai, Singapore & Tokyo despite having the highest price/sqft for real estate in the world!

2. FAMILIAR TERRITORY

With the Hong Kong market being more mature than Dubai, investors from neighbouring countries and cities might feel slightly more comfortable and confident investing in Hong Kong real estate. Hong Kong is also widely known as Asia's financial centre, which is why it's so appealing to buy property here.

DUBAI

Dubai

1. Larger variety of product

From penthouses to low rise apartments, villas and more - the properties in Dubai offered are a really large spread. In addition to this, you have much larger homes per square foot than Hong Kong could ever have. $1 million can buy 138 square metres of prime residential property in Dubai, according to a report by Knight Frank earlier this year. 

2. Higher affordability

While both rental & investment prices of property are as sky high as the buildings in Hong Kong, Dubai in comparison has far more competitive pricing. Dubai is still 16% cheaper than Hong Kong in terms of cost of living. Service fees in Dubai homes are also reportedly much cheaper than Hong Kong. In terms of dining out however, Dubai is quite expensive in comparison to Hong Kong.

3. No property taxes

While Hong Kong has a really low property tax on income earned through rent, Dubai remains tax free which proves to be a big benefit for real estate investors. Investors in Dubai property only need to pay a VAT (value added tax) for purchase of serviced residences or on top of the fees rendered by brokers.

4. Freehold property

Unlike Hong Kong, which has properties on leasehold, you can freely own property in Dubai which remains a huge incentive for investors worldwide. Hong Kong property is all on leasehold till 2047. It must be noted that both foreigners & locals can lease these properties in Hong Kong. In Dubai, there is some land such as those in areas like Jumeirah, which can only be owned by locals and noone else.

5. Higher rental yields

Overall, the rental yields in Hong Kong are nowhere as high as Dubai. Dubai offers far more promising returns at an average of 5-6% per annum, whereas Hong Kong is at 2% per year.