Buying a Second Home: How to Invest in Your Second Home in 2025

Why a Second Home Could Be a Smart Investment

A second home is more than a luxury; it can be a crucial, resilient part of a diversified portfolio. Many investors today use their second properties to balance lifestyle aspirations with long-term financial growth.

Here are some of the reasons why this asset class remains appealing:

Second Home vs. Investment Property

While both can generate returns, a second home typically serves a dual purpose, personal enjoyment and potential appreciation, whereas an investment property is primarily rented out for income. Understanding this distinction helps determine financing strategy, tax exposure, and management approach. Buyers looking for lifestyle flexibility should focus on locations and property types that balance both comfort and yield.

The Rise of Second Homes in Dubai’s 2025 Market

In 2025, Dubai continues to rank among the world’s leading second-home destinations for both investors and end users. In Dubai, second-home ownership has surged. According to a Gulf News report, the city ranks among the world’s top 10 destinations where high-net-worth individuals purchase secondary residences. This trend reflects the emirate’s continued global appeal, tax advantages, and strong property value growth.

Many buyers, especially from Europe, India, and the GCC, are drawn by Dubai’s lifestyle advantages, tax efficiency, and strong capital appreciation potential, with prime communities recording double-digit growth over the past year.

Essential Considerations Before Buying Your Second Home

Buying a second home in Dubai or elsewhere requires clarity on several key factors, from the purpose of the purchase to how it will be financed.

Choosing the Right Location

Location determines both personal enjoyment of a property and return on investment. When assessing the best second home locations, consider:

• Accessibility: Easy connections to airports, schools, and business districts healthcare facilities enhance both personal convenience and rental potential.

• Market performance: Review current and historical trends for price appreciation and rental yields.

• Community and lifestyle: Whether you prefer beachfront serenity, urban energy, or suburban family comfort, align your choice with how you plan to use the property.

Ultimately,  the best second home locations will depend on your goals and budget. But, Dubai offers a wide range of second-home destinations, from waterfront communities such as Palm Jumeirah and Dubai Marina to tranquil suburban enclaves like Arabian Ranches and Dubai Hills Estate. Each presents distinct advantages for investors and residents alike.

Best Second Home Locations in Dubai

For many, a key decision is whether to choose an established residential area in Dubai or one of the city's up-and-coming areas. 

Costs and Financing a Second Home

Understanding the financial implications of buying a second home is critical. Beyond the purchase price, factor in the costs of buying property including:

• Property registration fees:  (4% of the purchase price)

• Agency commission: 2% of the purchase price

• Annual maintenance charges and service fees

• Insurance and furnishing costs

• Mortgage repayments: if financing using a second home mortgage

For buyers considering a second home mortgage, it’s important to note that banks often require larger down payments, typically 40–50%, compared to first homes. Interest rates and eligibility criteria also vary depending on residency status and income level. Consulting an independent mortgage advisor ensures the most competitive terms.

Legal Considerations When Buying a Second Home

In Dubai, freehold zones allow foreign buyers to fully own residential property. However, understanding local legal frameworks is essential to avoid delays or complications. Key points include:

• Title registration: All transactions must be registered with the Dubai Land Department (DLD).

• Off-plan purchases: Ensure the developer is RERA-approved and that payments are made to an escrow account.

• Residency implications: Some property investments may qualify for long-term residence visas, adding another layer of value.

Buyers should note that property purchases of AED 1 million or more may qualify for a two-year investor visa, while those worth AED 2 million or more may be eligible for a 10-year Golden Visa, provided the property is completed and not mortgaged beyond 50% of its value.

Professional consultation ensures compliance and peace of mind throughout the process.

Second Home Ownership Options (Full, Fractional, or Co-Investment)

Ownership structures have evolved. Today, buyers can select from several models based on their goals and budget:

• Full ownership: Traditional outright purchase, ideal for those seeking total control and potential capital gains.

• Fractional ownership:Fractional ownership enables multiple investors to own shares in a high-value property. This structure offers flexibility and lower entry costs, making luxury assets more accessible.

• Co-investment: Investors jointly purchase a property, sharing usage rights and returns under a legal framework.

Risks and Challenges of Owning a Second Home

Every investment carries risk, and property ownership is no exception. Key considerations include:

• Market fluctuations: Property prices can adjust due to global or regional economic shifts.

• Maintenance responsibilities: Upkeep is ongoing- particularly for holiday or seasonal homes left unoccupied.

• Liquidity: Real estate is less liquid than equities or bonds; selling may take time depending on market conditions.

• Taxation abroad: If you own a second home outside your home country, understand potential tax obligations on income or capital gains.

Working with a professional advisor mitigates these challenges by ensuring every decision is based on accurate data and due diligence.

Managing Your Second Home

For overseas owners, effective management is key to maintaining your second home’s value and maximizing returns. Hiring a licensed property manager can handle tenant relations, maintenance, and compliance.

Dubai’s Department of Tourism and Commerce Marketing (DTCM) also allows homeowners to apply for short-term rental permits, enabling flexible income opportunities when the property is not in use. 

Tips to Maximize the Value of Your Second Home

Optimizing the value of your second home in Dubai requires both strategic and practical steps:

1. Prioritize location and timing: Markets like Dubai’s continue to perform strongly, supported by government initiatives and infrastructure growth.

2. Choose reputable developers: Proven track records and RERA registration are essential indicators of reliability.

3. Invest in upgrades: Quality interiors, smart technology, and energy-efficient features can significantly boost resale and rental value.

4. Leverage professional management: A local property manager ensures maintenance, tenant screening, and compliance.

5. Monitor market trends: Regularly review market reports and your investment performance to decide when to sell, refinance, or expand your portfolio.

Conclusion

Whether it’s a beachfront retreat or a city-centre apartment, buying a second home in Dubai represents both a lifestyle upgrade and a prudent financial decision. In 2025, global investors continue to look to Dubai for its stability, innovation, and strong rental yields.

With expert support from Engel & Völkers, you gain more than property advice, you gain a trusted partner committed to helping you make confident, informed decisions. Explore your options, secure the right second home mortgage, and let your next property move reflect the future you envision.