By Ava Vonfyler, Co-Founder of Hutfin
I've had the same conversation with investors dozens of times. They're making money in one market and wondering if they should expand to the other.
American investors ask me about Dubai. Emirati and expat investors ask me about the United States. Both groups think the grass might be greener on the other side.
Here's the reality: both markets offer legitimate opportunities to build wealth through commercial real estate. But they're fundamentally different in ways that matter enormously to your success.
Let me break down the real differences so you can make smart decisions about where to deploy your capital.
This is the single biggest difference between investing in the United States and the UAE, and most investors don't fully understand it until they're already committed.
In the United States: When you buy commercial property, you own the land and the building outright. You hold title in perpetuity. Your ownership can be passed down to your children and grandchildren. The government can't arbitrarily take it back. You have strong property rights protected by centuries of legal precedent.
In the UAE: Outside of designated freehold areas, property ownership works differently. In many cases, you're buying a leasehold interest, not outright ownership. Even in freehold zones, the rules can be complex and vary by emirate and development.
In Dubai, for example, foreign investors can own property in designated freehold areas like Dubai Marina, Downtown Dubai, and Business Bay. But the concept of freehold in the UAE is still relatively new compared to property rights in the United States, and the legal framework continues to evolve.
This distinction affects everything else: your financing options, your exit strategy, your ability to pass wealth to heirs, and your fundamental security as an investor.
The United States has a mature, predictable legal system for real estate that's been refined over 200+ years.
Property rights are enshrined in the Constitution. Contract law is well-established. If someone violates your property rights, you have clear legal recourse through a court system that, while imperfect, is generally fair and predictable. Title insurance protects you from ownership disputes. Eviction processes are standardized by state law.
The UAE's legal system is newer and evolving. Dubai has made massive strides in creating investor-friendly frameworks, but the legal environment is less predictable than the United States. Property laws can change more rapidly. Court processes may work differently than Western investors expect. The concept of precedent works differently in civil law systems.
This doesn't make the UAE a bad investment market. Dubai has gone to great lengths to create transparent, investor-friendly regulations. But you need to understand that the legal framework is younger and less tested by time than what you'll find in the United States.
The way you finance commercial real estate differs dramatically between these markets.
In the United States: Commercial real estate financing is highly developed. You can get loans at 65-80% loan-to-value ratios on good properties. Interest rates are competitive. Loan terms extend to 20-30 years. The secondary market for commercial mortgages is deep and liquid. Non-recourse loans are common for larger properties.
You can also access SBA loans for certain property types, CMBS loans for larger deals, and creative financing structures like seller financing or master leases. The options are extensive.
In the UAE: Financing is more restrictive, especially for foreign investors. Expect to put down 40-50% or more for commercial properties as a non-resident. Interest rates tend to be higher than in the United States. Loan terms are often shorter. The lending market is smaller and less competitive.
Many UAE banks prefer lending to locals or established businesses with UAE operating history. If you're a foreign investor without significant UAE presence, you may struggle to find financing at all.
This means you need substantially more capital to invest in UAE commercial real estate compared to similar investments in the United States. The math changes completely when you need $500,000 down payment instead of $250,000 for the same size investment.
This is where the UAE has a significant advantage for many investors.
United States: You pay property taxes annually, typically 1-3% of property value depending on location. You pay income tax on rental income at your ordinary income rate. You pay capital gains tax when you sell, though 1031 exchanges allow you to defer this. You deal with complex depreciation schedules, cost segregation studies, and detailed tax reporting requirements.
Federal income tax rates go up to 37%, plus state income taxes in most states. The tax code offers benefits like depreciation and interest deductions, but it's complex and requires good accountant support.
UAE: No personal income tax. No capital gains tax. Minimal property taxes in most emirates. This is a game-changer for cash flow and returns.
A property generating $100,000 in net income in the United States might leave you with $60,000-70,000 after taxes depending on your situation. That same property in the UAE lets you keep the full $100,000.
However, don't forget about taxes in your home country. US citizens pay tax on worldwide income regardless of where they live or where the property is located. So American investors can't simply avoid US taxes by investing in the UAE unless they're willing to renounce citizenship, which has its own massive implications.
For non-US investors, the UAE's tax structure is incredibly attractive. You keep more of what you earn.
The United States commercial real estate market is enormous, mature, and relatively stable.
You can find detailed data on almost any market. Historical performance data goes back decades. The market has been through multiple cycles and recovered from each one. Liquidity is generally good, especially in major markets. You can research submarkets extensively before investing.
The UAE market, particularly Dubai, is younger and more volatile. It's gone through boom and bust cycles in a short period. The 2008-2009 crash hit Dubai harder than most US markets. Recovery was strong but took time.
Market data is improving but still less comprehensive than in the United States. Some transparency gaps exist. The market can move more dramatically in both directions because it's smaller and more concentrated.
This creates both opportunity and risk. Skilled investors can make exceptional returns in Dubai by timing cycles well. But you can also get hurt badly if you buy at the wrong time.
The US dollar is the world's reserve currency. It's stable, liquid, and accepted everywhere. When you invest in US commercial real estate, currency risk is minimal unless you're converting from another currency to buy.
The UAE dirham has been pegged to the US dollar since 1997 at a fixed rate of 3.6725 dirhams per dollar. This removes currency risk between these two markets, which is actually a significant advantage for investors moving between them.
If the peg ever broke, that would change everything. But it's held for nearly 30 years and shows no signs of changing. Both governments have strong incentives to maintain it.
For investors from other countries, this means currency risk relative to your home currency is essentially the same whether you invest in the United States or UAE.
United States: Massive diversity in property types, markets, and strategies. You can invest in office buildings, retail centers, industrial warehouses, multifamily apartments, self-storage, mobile home parks, specialty properties like medical offices or data centers, and everything in between.
Every major city and many secondary markets have active commercial real estate markets. You can choose your risk level, from stable core properties in primary markets to value-add opportunities in emerging areas.
UAE: More concentrated in certain property types and locations. Dubai dominates the market, though Abu Dhabi and other emirates have opportunities. Hospitality and retail are huge due to tourism. Office space serves the financial and business sectors. Industrial and logistics are growing but smaller than in the United States.
Multifamily residential is significant but works differently than in the United States. Many properties are individually owned units in towers rather than entire buildings owned by one investor.
The market is less diverse, which means fewer niche opportunities but also simpler decision-making about what to invest in.
United States: The process is standardized and well-documented. You work with real estate agents, attorneys, inspectors, and title companies. Due diligence periods are clearly defined. Escrow protects both parties. The closing process is transparent with detailed documentation.
Issues and title defects are thoroughly researched before closing. If problems exist, they're typically resolved before money changes hands. The system protects buyers through multiple layers of professional oversight.
UAE: The process is improving but can be less standardized. Developer reputation matters enormously because not all projects are equal. Off-plan purchases are common, which adds risk that doesn't exist as much in the United States where most commercial properties are already built.
Due diligence may require more effort to verify details that would be automatically confirmed in the United States. Working with experienced local advisors is essential because processes vary by emirate and even by specific development.
The government has implemented reforms to increase transparency and protect investors, but you still need to be more cautious than in the United States.
In the United States, market information is abundant and mostly reliable. You can access detailed data on sales comps, rental rates, vacancy rates, demographic trends, and economic indicators. Services like CoStar, LoopNet, and local MLS systems provide extensive property data.
Public records show actual sales prices. Title records are accessible. Financial reporting requirements for REITs and public companies create additional transparency.
In the UAE, information is less readily available. Sales data may not be fully public. Rental rates can be harder to verify. Market research firms provide data, but it's often less granular than in the United States.
This information asymmetry means local knowledge and relationships matter more in the UAE. Investors with good local networks have significant advantages over outsiders trying to invest from abroad.
United States: Deep buyer pool for commercial properties. Multiple exit options including selling to other investors, users, or institutions. 1031 exchanges allow tax-deferred reinvestment. The market can absorb large properties without difficulty. Holding periods are flexible based on your strategy.
UAE: Smaller buyer pool, especially for larger commercial properties. Foreign ownership restrictions in some areas limit potential buyers. The market can be more illiquid during downturns. Large properties may take longer to sell. You need to plan your exit more carefully because you have fewer options.
That said, Dubai's market is improving rapidly. Liquidity has increased significantly over the past decade as the market has matured and foreign investment has grown.
United States: Heavy regulation at federal, state, and local levels. Zoning laws, building codes, environmental regulations, fair housing laws, ADA compliance, and countless other rules. This creates compliance costs but also predictability.
Regulations change slowly through legislative processes. You generally know what's coming and can plan accordingly. The regulatory burden is significant but manageable with proper professional support.
UAE: Lighter regulatory touch in many areas, which can be advantageous for developers and operators. However, regulations can change more quickly, sometimes with limited notice. Each emirate has its own rules, adding complexity if you invest across multiple emirates.
The UAE has been adding regulations to increase investor protection and market stability, which is positive long-term but creates some uncertainty during the transition.
There's no universal answer. It depends entirely on your situation, goals, and risk tolerance.
Choose the United States if:
Choose the UAE if:
Consider both if:
Most investors should focus on mastering one market before expanding to another. The differences between US and UAE commercial real estate are substantial enough that succeeding in both requires significant learning and relationship-building in each market.
I've seen American investors lose money in Dubai because they assumed it worked like the United States. I've seen UAE investors struggle in the United States because they underestimated the complexity of US tax law and financing structures.
Start where you have advantages: local knowledge, existing relationships, understanding of the legal system, and preferably citizenship or residency that simplifies ownership and financing.
Build success in that market first. Once you've created wealth and developed expertise, then consider expanding internationally if it makes strategic sense.
At Hutfin, we work with investors in multiple markets around the world. The investors who succeed internationally are the ones who respect the differences between markets rather than assuming everywhere works like home.
The United States and UAE both offer legitimate opportunities for commercial real estate investors. Neither is objectively better than the other.
The United States gives you stronger property rights, better financing options, more market transparency, and greater diversity of investment options. You pay for this through higher taxes and more regulation.
The UAE gives you tax advantages, less regulatory burden, and exposure to emerging market growth. You pay for this through higher capital requirements, less leverage, and more market volatility.
Your decision should be based on your specific situation: where you live, your citizenship, your available capital, your risk tolerance, your expertise, and your long-term goals.
Don't invest in either market because of hype or fear of missing out. Invest where you have genuine advantages and where the risk-reward profile aligns with your personal situation.
Both markets can build wealth. Both have destroyed wealth for investors who didn't understand what they were getting into.
Do your homework. Build local expertise. Start small. Learn the market thoroughly before deploying serious capital.
That approach works in the United States, the UAE, or anywhere else you choose to invest.