It's the question every international investor is asking: should I put my money in Dubai or London? Both cities attract global capital. Both have world-class infrastructure. But in 2026, the numbers tell a very different story.
The Quick Answer
| Factor | Dubai | London | Winner |
|---|---|---|---|
| Gross Rental Yield | 5-9% | 3-4.5% | 🏆 Dubai |
| Net Yield (after tax) | 5-9% | 1.5-3% | 🏆 Dubai |
| Entry Cost (per sqft) | $300-800 | $1,000-3,000+ | 🏆 Dubai |
| Transaction Tax | 4% (one-off) | 5-15% SDLT | 🏆 Dubai |
| Annual Property Tax | 0% | Council Tax + Income Tax | 🏆 Dubai |
| Capital Gains Tax | 0% | 18-28% | 🏆 Dubai |
| Market Maturity | Developing | Mature | 🏆 London |
| Price Stability | More volatile | More stable | 🏆 London |
| Legal System | Civil law | Common law | 🏆 London |
| Residency Benefits | Golden Visa | None | 🏆 Dubai |
Rental Yields: No Contest
Dubai Gross Yields (2026)
- Studios (JVC): 8-10%
- 1-beds (Dubai Marina): 6-7.5%
- 2-beds (Downtown): 5-6.5%
- Short-term rental: 8-12%
London Gross Yields (2026)
- Studios (Zone 1): 3.5-4.5%
- 1-beds (Zone 1-2): 3-4%
- Houses (Outer London): 2.5-3.5%
In Dubai, gross ≈ net (no income tax). In London, a 4% gross yield might net 2% after tax and costs.
What AED 2M (~£420K) Buys You
In Dubai: A well-located 2-bed in Marina or JBR, or a spacious 3-bed in JVC.
In London: A small 1-bed in Zone 3-4, or a studio in Zone 2. Nothing in Zone 1.
Tax: Dubai's Decisive Advantage
Dubai
- Purchase: 4% DLD fee (one-off)
- Annual: Zero
- Rental income: Zero
- Capital gains: Zero
London
- Purchase: 5-15% SDLT + 2% non-resident surcharge
- Annual: Council tax (£1,500-5,000+)
- Rental income: 20-45% tax
- Capital gains: 18-28% CGT
Over a 5-year hold, the Dubai investor keeps tens of thousands more.
Capital Appreciation
Dubai 2020-2025: Average +55-70%. Prime areas +80-120%.
London 2020-2025: Average +10-15%. Prime Central +5-10%.
Dubai delivers higher peaks but sharper corrections. London delivers lower but more consistent returns.
Risks
Dubai
- Oversupply — significant new stock annually
- Cycle dependency — tied to oil prices and global sentiment
- Younger regulatory framework
London
- Tax trajectory — only going up
- Affordability ceiling
- Increasing landlord regulations
Who Should Buy Where?
Buy Dubai If:
- You want maximum yield with zero tax
- You want a residency visa through property
- You're comfortable with higher volatility
- You're optimising for tax efficiency
Buy London If:
- You want maximum stability and minimal risk
- You need GBP-denominated assets
- You value legal system maturity above all
- You're investing for 20+ years
The Bottom Line
In pure financial terms, Dubai wins for investors in 2026. Higher yields, zero tax, lower entry prices, and a residency visa. London wins on stability, legal maturity, and long-term predictability.
The smart money? It buys both.
Ready to Explore Dubai Investment?
Whether you're considering Dubai, London, or both — the right guidance makes the difference.