Dubai vs Marbella?

There has been a lot of growth and excitement around the real estate market in Dubai. It has been a magnet for young “influencers” and big investment dollars. And the government in the UAE is trying to grow the real estate sector with subsidies, simplified visa processing and more incentives. It is clearly having success.

Last year, real estate transactions grew by a whopping 41.8%, driving up prices by just under 20%. In fall of 2024 sales continued to surge year on year with a growth of 36%. 20% of homes sold were for over US$1 million, rising from just 6.3% of sales in 2020.

Prices are expected to rise next year by a further 8% as property listings decline and house construction fails to keep up. And while, by 2029, it is expected that there will be 210,000 new units built, this is just over 1/3 of what is projected as necessary.

This is definitely a hot market.

Marbella vs Dubai

Comparing Marbella to Dubai is a bit like comparing apples to oranges. Dubai is a very different environment. For one thing, the population of Marbella is less than 170,000, while Dubai has a population of over 3 million, almost twice the size of Málaga province.

Nonetheless, it has some things in common, primarily that it has an important luxury market that is growing significantly and has a large tourist sector. Tourism is 14% of Spain’s GDP and close to 12% of Dubai’s. And it is growing in both areas, though it grew by 7.7% in Costa del Sol between 2019 (last full year pre-Covid) and 2023, while growing just 2.5% in Dubai in the same period.

In both regions, technology/innovation, renewable energy, and construction are also significant economic contributors.

The real estate market in Marbella is healthy but steady. Between 2023-2024 there was a 10% increase in sales although that may well represent a continued settling of markets post-Covid. Otherwise, it is within the typical range of the last decade.

It’s also worth noting that Marbella has faced more than a decade’s long challenge to establish a modern, transparent urban planning regime. This continues to hold back construction development in the metropolitan area, though hopefully that should be resolved this year and next. The general plan (PGOM) that sets priorities and principles, is supposed to be passed early 2025.

However, even with planning problems, housing starts have grown in Málaga province in which Marbella is located, though not at the pace required by demand. In this way, too, Marbella is similar to Dubai.

Property prices also continue to rise, growing by 12% between 2023-2024 and about the same the year before. It’s clear that this is a stably growing market, which is better than explosive growth. We know where explosive growth tends to end – it took Spain almost fifteen years to recover from the 2007 bubble.

And while Marbella is one of the more expensive cities on the coast – or at least it can be, depending on your lifestyle – Dubai is 32% more expensive. In terms of real estate, Dubai’s price per square meter is comparable to those of Spain – about 10% greater in the city centre. It’s possible that predictions will hold for a price stabilization slightly above those of Marbella.

On that level, I think that we can say that Dubai and Marbella offer similar “value propositions” – modern infrastructure, good healthcare, low crime, warm climate, and luxury lifestyles in a coastal city.

If you’re looking to invest in rental properties in either locale, the overall average on rental yields appears to be very similar, if slightly lower in Marbella. In downtown Dubai the yield is between 4.37%-6.79%, whereas in downtown Marbella the average is between 3.9%-5.66%. At present Dubai has no personal income tax, which would effectively boost earnings.

Rights and Stability

Raw economic considerations aside, those thinking of where to purchase a property should consider the overall context and whether each location meets their needs.

To give just one example, Dubai is almost 90% expats. Emiratis only make up 11.5% of the total population. Marbella, with one of the highest expat populations in Spain is under 33% expats. Obviously, if you want to enjoy the local culture, have local friends, etc. that is very unlikely to happen in Dubai.

The age demographic in UAE (where Dubai is located) is certainly younger than in Marbella, with an average of 33.6 years vs 46 years old in Marbella. This suggests lots of singles and some younger families. Don’t get too excited guys, men outnumber women 2:1.

In Marbella there are more retirees and established families with somewhat older children. In fact, only 2% of Dubai residents are of retirement age, with the vast bulk (68.6%) being in their child-rearing years of 25-43 years old.

It also suggests a lot of Marbella’s residents are seasonal, which is reflected in the fact that the population basically doubles during high season. It’s quick, cheap and convenient to get to Marbella from the UK or Germany. It’s the difference between 7 hours to Dubai from London and 2.5-3 hours to Málaga airport.

In Dubai, on the other hand, the lack of locals with deep roots in the area means that the population is also less committed and more transient. When the crisis hit Spain in 2008-09, Marbella didn’t turn into a ghost town. In fact, the market was one of the more stable ones in the country.

If Dubai suffered a deep crisis, would everyone rush for the door? 77% of respondents in a recent survey of Dubai residents said that they were renters. Combined with the extremely high expat population, that’s a lot of people with little fixed commitment if things get tough.

This is not just idle speculation. The Middle East is a, shall we say, contested region. In 2011 with the Arab Spring uprisings, the Egyptian tourism industry was devastated – ironically, helping to develop the Spanish tourism industry as an alternative.

The possibility of war with Iran remains ever-present and it is very close to the UAE, just across the Persian Gulf. Any sea battles will happen on their shorelines. And there remain significant armed conflicts in nearby Yemen – in which the UAE participated – Syria, and Israel/Palestine.

But even if there’s no war – fingers-crossed – it’s important to keep in mind that the UAE is not a democracy and does not tolerate freedom of speech outside of very restricted limits. That might not be of concern to you, if you’re primarily a property investor. But for many people, including those with rebellious youth (are there any other kind?), it might well be.

As for equality, while women are legally equal in most senses, there remains significant issues with discrimination. And women are still subject to legal male guardianship, which means that men face lesser sentences for domestic violence against female family members. Homosexuality also remains illegal in the UAE, with a minimum sentence of six months and a maximum of the death penalty.

Spain is not perfect but has come a very long way with regards to women’s rights. And the freedom to protest means that, for instance, female footballers were able to stand up against sexual harassment and win better contracts without facing jail time for doing so. Spain also has legal same sex marriage.

Conclusion

Dubai has many attractions that are drawing large numbers of people to buy property there – from the EU and beyond. It has quickly grown in population and in terms of its real estate market – both in terms of sales and prices. It has a relatively young demographic and is seen as both hip and modern.

But it is definitely not for everyone. It’s newness and its authoritarian political and legal system mean that it is inherently unstable – in an unstable part of the planet. If you’re young, single and living your wild years – if you’re not LGBTQ+ – then there’s an attraction.

However, if you’re retired or have a young family, or you’re investing a limited nest egg, either in a rental property or a second home, the risks might feel rather high.

In that case, I think that Marbella remains a more attractive proposition. For all of Spain’s vigorous political debates, it is unlikely to veer into extremism. The weather is great and the food is healthy, fresh and tasty. Its economy is strong and it isn’t suffering from a real estate bubble. It’s also cheaper by almost every measure.

If your goal is to find peace and quiet, as well as beauty, culture and long-term security – as well as stable real estate investments – then Marbella is a better choice.

By Adam Neale | Property News | April 28th, 2025

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