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Real Estate Developer Warns Against Dubai Property Hype Amid Soaring Investments
Dubai’s property market has drawn global attention in recent years, with investors lured by promises of rapid growth, zero taxes, and striking returns. But a prominent European developer has warned that beneath the glossy marketing campaigns lies a risk that could leave some investors financially exposed.
Péter Zentai, owner and chief executive of Idom Group and Nádor Group, told Hungarian media that a wave of capital is flowing into Dubai real estate from his country, often driven by unrealistic expectations. “If someone tells you you will be a billionaire in a few months without hard work, it is almost always a scam,” he said.
The warning comes at a time when Dubai is experiencing one of its most aggressive property booms since 2008. According to the Dubai Land Department, property transactions in 2024 surpassed AED 500 billion ($136 billion), setting a new record. Analysts credit population growth, foreign investor interest, and new visa pathways for fueling demand. Yet critics point out that such rapid growth is built on fragile assumptions about long-term returns.
Zentai believes many buyers are chasing dreams without assessing the risks. “Many people are throwing away their family silver in the desert,” he said, noting that billions of Hungarian forints are leaving the domestic economy. He estimates between HUF 10 billion and 100 billion ($25.5 million to $255 million) has already been transferred from Hungary into Dubai property.
One concern is the marketing of projects promising 30 to 100 percent appreciation during construction. While such figures attract attention, real estate experts caution that no one can predict how much Dubai property prices will rise in the coming years. “I would be extremely cautious with such tempting offers. They are all based on assumptions,” Zentai said.
Dubai’s real estate sector is vast and competitive. More than 15,000 agents are licensed to sell properties, with most working for large multinational developers from China, India, Turkey, and the Gulf. For smaller firms and individual investors, this competitive landscape can make it difficult to secure lasting value.
Zentai’s criticism is not just financial but also macroeconomic. He argues that Hungarian capital flowing into Dubai weakens his own country’s domestic programs, including subsidized housing schemes designed to help local families. “If Hungarian citizens invest their money in Dubai, our own national programs will never succeed. There simply will not be enough capital left at home,” he said.
The risks extend beyond economics. Zentai notes that property rights in Dubai vary between freehold and leasehold, with the latter meaning buyers must pay land rent indefinitely. “If you buy a villa on leasehold land, you might be paying rent forever – and you will not even know how much it will cost in the future,” he warned.
Legal recourse is also limited. Several investors from Hungary, according to Zentai, never received occupancy permits for their purchased properties, leaving ownership in limbo. Going up against a major developer or bank in Dubai, he argues, offers almost no protection for foreign buyers.
Another overlooked factor, he says, is the climate. During summer months, temperatures in Dubai regularly exceed 45°C, with humidity pushing the perceived heat even higher. A friend recently recorded 67.5°C on a terrace surface, Zentai claimed. From May to September, rental demand weakens as both expatriates and locals often travel abroad to escape the extreme heat.
Despite Dubai’s appeal as a tax-free haven, Zentai questions whether this policy will last. “There is no guarantee the tax system will not change in two to three years,” he said. While the UAE has repeatedly reassured investors about its business-friendly environment, the introduction of a federal corporate tax in 2023 raised questions about whether other levies could follow.
Multi-level marketing schemes, he adds, are now tied to Dubai property sales. Agents promise commissions to recruits who bring in buyers, often targeting vulnerable individuals. “Selling a HUF 100 million property earns agents a small share of commission. The real problem is that this money does not stimulate our economy or contribute to our tax base,” Zentai said.
For those still seeking overseas investments, Zentai recommends Europe, where property ownership laws are clearer and long-term stability is stronger. He argues that in Hungary, homes can be passed down for generations, aligning with cultural values of permanence. “Budapest has outstanding fundamentals. We are on the cusp of a major leap forward,” he said.
Dubai, by contrast, remains a speculative market built on foreign demand. Zentai concludes with a note of caution for young buyers hoping to strike quick fortunes. “Many young people are jumping on the Dubai trend train. But I believe in careers built on real work – not in fairy tales of faraway fortunes.”
The term Dubai property hype refers to the exaggerated marketing and promotional campaigns that portray Dubai’s real estate market as a guaranteed path to quick wealth. While the city has shown strong growth, experts warn that returns are not certain, and buyers should carefully assess risks such as ownership rights, taxes, and market volatility.
No market can guarantee 100% returns, and Dubai is no exception. Some projects promote high appreciation during construction, but these numbers are speculative. Actual performance depends on demand, location, global economic conditions, and rental viability. The Dubai property hype often overshadows these realities.
Foreign investors may face challenges such as limited legal recourse, leasehold ownership instead of freehold, delayed project handovers, and difficulty renting during extreme summer months. Many of these risks are downplayed in the Dubai property hype, leaving buyers with incomplete information.
Yes, it is possible. Although Dubai promotes itself as a tax-free hub, the UAE introduced a corporate tax in 2023, showing that policies can evolve. Experts warn that relying on zero tax as a long-term certainty is risky, and investors caught in the Dubai property hype may overlook this factor.
Leasehold properties can be risky because buyers do not own the land permanently and may face indefinite rental costs set by the landowner. This creates uncertainty about long-term expenses. Many investors drawn in by the Dubai property hype only later realize the implications of leasehold agreements.
