Dubai and Toronto emerge as two of the most intriguing cities, when comparing global real estate markets. Each offers unique opportunities and challenges for investors, homeowners, and renters. In this blog, Azizi will dive deep into Toronto and Dubai real estate markets, discussing their differences and what they promise for the future of property investment.
Dubai is synonymous with luxury and futuristic architecture. Communities like Palm Jumeirah and Downtown Dubai highlight the real estate scene and present the city as an attractive property destination globally. Dubai also has a diverse range of properties, including studios, apartments, villas, penthouses, and townhouses.
Toronto, Canada’s largest city, boasts prestigious neighbourhoods like Yorkville and The Beaches, reflecting its cultural diversity. Property types in Toronto include detached houses, semi-detached houses, row houses, freehold and condo townhouses.
Home prices are on the rise in Toronto in 2023. The Toronto Regional Real Estate Board (TRREB) reported that the average sale price rose by over 4% in July 2023, recorded a year earlier. However, when adjusted for seasonal factors, the average price for a residential property in Toronto slightly decreased by 0.7%.
The focus of Toronto’s real estate market is shifting towards affordable housing, as affordability is a growing concern in Canada in general.
What’s it like in the Dubai real estate market? Dubai has surpassed luxury property prices in major cities like Tokyo, according to the Prime Global Cities Index Q2 2023 report. Dubai housing prices are more affordable compared to Toronto.
Compared to 2022, there has been an uptick in home sales and new listings in Toronto. On the other hand, the Dubai real estate market is experiencing more demand for property due to an 88,766 surge in population, according to a Dubai Statistics Center report. The market is expected to expand following this population surge.
Toronto is known for its advanced infrastructure, but recently, the city’s residents expressed concerns about its infrastructure facilities falling behind, unlike usual.
What about the luxurious Emirate? Dubai has long been praised for offering high-quality infrastructure, from roads to the Dubai metro and airport.
Foreigners can easily buy property in Toronto, but the purchase will be subject to the Non-Resident Speculation Tax (NRST).
However, it’s important to note Canada’s two-year foreign home buyers ban was applied starting January 2023. This ban prohibits non-Canadians and non-permanent residents from purchasing residential property in the country. It aims to increase the supply of homes and make housing prices more affordable for citizens.
Can foreigners buy property in Dubai? Yes. The process is very straightforward. The UAE government introduced the freehold ownership law in 2002, allowing non-residents to purchase properties in freehold areas, including Palm Jumeirah, Dubai Sports City, Downtown Dubai, and Dubai Marina. Other government initiatives that favour non-resident property owners are the Golden Visa and the 100% business ownership initiative.
Dubai earns a point here! Toronto imposes property taxes, ranging from 0.75-1% of the amount for residential property owners and 2-3% for commercial properties. When you sell an investment property in Canada, it’s subject to capital gains tax. Additionally, while you hold the property, its rental income is taxable. Both these taxes can impact your overall returns.
On the contrary, Dubai is renowned for its tax-free environment, with zero property, capital gains, and income tax.
While it’s not as strong as the US dollar, the Canadian dollar is considered one of the safest currencies in the world. On the other hand, The UAE Dirham is tied to the US dollar and is regarded as a very stable currency.
Once again, Toronto was named the most expensive city in Canada, and it’s definitely more expensive than Dubai, according to Numbeo, which offered the following comparison of the cost of living in Dubai vs. Toronto:
- Consumer Prices in Toronto are 14.3% higher than in Dubai (without rent)
- Consumer Prices, including Rent in Toronto, are 8.5% higher than in Dubai
- Rent Prices in Toronto are 0.2% higher than in Dubai
- Restaurant Prices in Toronto are 14.5% higher than in Dubai
- Groceries Prices in Toronto are 45.9% higher than in Dubai
- Local Purchasing Power in Toronto is 33.7% lower than in Dubai
Who wins here? definitely Dubai! The gross rental yields in the Canadian city amount to an average of 4.49%. Why does Dubai win here? The Dubai real estate market offers much more than a lavish lifestyle. The city promises investors looking for profitable property investments up to 9% rental yields, depending on the area and property type.
Dubai’s rental attractiveness is a result of the city’s appealing lifestyle that attracts professionals, students, and even retirees, who view the city as one of the best places to live in the world.
In Canada, 50% of the value of any capital gains is subjected to taxes. What if investors chose Dubai? One of the main reasons behind Dubai’s investment-likeability stems from the fact the UAE imposes no income or capital gains taxes, which presents the city as a better option for capital growth compared to Toronto.
Want to learn more about investing in Dubai property? Visit Azizi’s blog for more market insights.