Dubai

Overview

Since May 2002 when the crown prince of Dubai, Sheikh Mohammed bin Rashid Al Maktoom issued a decree allowing foreigners the right to buy freehold property in Dubai, the real estate market there has boomed!

The market is rising strongly and steadily with some new developments selling out off-plan within 48 hours of their release, and certain projects enjoying an incredible re-sale market with contracts swapping at 100% increases in certain cases.

Despite the instant boom following the 2002 announcement, the price increases are expected to continue because properties still offer very good value for money, there is an increase in demand over supply and when you combine these facts with the tax and business advantages offered the investment property market in Dubai is very appealing.

Currently Dubai’s population is the fastest growing in the world, which puts an upward pressure on rental demand and prices of course. In turn there is not enough rental property available to fuel the pace of demand which has further led to an increase in demand for properties and has increased the number of developments being bought off-plan as well.

With Dubai considered a safe city with a strong trading tradition and accepted as an almost unrivalled city in terms of its prosperity, its real estate market is considered a very ‘safe’ bet all round by many.

People who are interested in entering the market but who have not yet got on the ladder are sincerely hoping that the market will cool a little allowing them a window of opportunity. However, all evidence points to the contrary with experts suggesting that the Dubai property market has only just started to take off!

As the supply of property in Dubai is way below the demand, developers cannot plan, release or build property fast enough for the market and in some cases developers have simply run out of land on which they can build. All this creates a situation where the prices can only head up, up, up and away!

With both local and global interest in Dubai’s real estate market getting stronger not weaker the property market is gathering momentum and is set to run-and-run. And if you examine and compare the property market in Dubai to others globally you will begin to understand the potential for growth in the market. For example there is currently an enormous void between house prices in the UK and Dubai and if you choose to compare Dubai to Hong Kong as your global benchmark, you can see how high prices could go.

But Dubai is determined that it will not develop a speculative property market dominated by trading in housing options - a market which can suffer from swinging fortunes. It wants to establish a solid real estate market where money can be safely invested for the long-term. To achieve this goal it is important to bring supply and demand in line and ironically the only way to achieve this is to allow speculators and re-sale purchasers to bid up the value of Dubai real estate in the short to medium term to price the short term speculators out and encourage long-term stable investment.

When purchasing real estate or investment property in Dubai you will find most properties are offered as freehold purchases - although there are a few leasehold properties on the market. Generally a leasehold property is in the form of an apartment and the period of the lease will be 99 years. A cash reservation deposit is usually required to secure your interest in a property - this deposit ranges from £1000 to £3000 depending on the total cost of the property. This deposit is refundable if the vendor cancels or denies you the right to buy, but is non-refundable if you decide to cancel.

Purchasers buying off-plan are usually expected to pay a deposit of 10% of the purchase price when the purchase contract is signed and during the build process it is normal to pay installments, these will differ per developer and per contract but will be to a mutually agreeable timetable over a period of the build.

There are no government taxes of any kind related to the purchase of property in Dubai, adding to the attraction of investment property in Dubai, and in most cases a property purchaser and their immediate family will be issued with permanent residence visas by the government when they buy.