Buy a property in Dubai

There are very few with a passing interest in overseas property who will not have read something about Dubai and its unique real estate market by now. It has only been open to foreign investors since 2003 and freehold ownership will not become an option until later this year. Dubai, which is the second largest of the seven emirates that make up the United Arab Emirates (UAE), has a population of 1.67 million, 80% of whom are expatriates. As Arab states go, and even by UAE standards, Dubai is probably as liberal, stable, and Westernized as it gets. No problem for women, whatever they wear, religious tolerance is the order of the day and drinking alcohol is not prohibited, although public drunkenness is frowned upon, so it may not be the ideal place to your next bachelor party.

Judging Dubai’s nascent real estate market by the standards of anywhere else on the planet is a bit pointless, it’s just not like anywhere else in the world. Parallels can occasionally be drawn with Las Vegas, but the biggest similarity you’re likely to find is the planned nature of the cities. Dubai is certainly a very artificial city if you look at it that way, don’t expect to find too organic and disorganized real estate growth here, everything is being planned to perfection. He also has a penchant for taking the best and most celebrated architectural designs and features from other countries and cultures and using them in new and unusual ways. It may not be a huge draw for architecture purists, but it’s still quite intriguing as a design ethos.

In terms of financial attractiveness for developers and investors alike, it doesn’t get much stronger than Dubai, the tax-free status is as good as it gets. As Ray Norton of Larionovo puts it, “The tax situation here tends to be a pretty short talk, there’s no tax on almost everything.” It’s easy to overlook the effect this has on attracting incoming economic activity until you take a quick look at Europe and see the effect of reducing corporate tax rates to 15% for a country. This will give you an idea of ​​the attraction of Dubai. Kofi Annan recently went so far as to call Dubai an “economic miracle,” so the emirate obviously has friends in high places. It is essentially an entirely tax-free zone and this fact has not gone unnoticed by the world’s corporations. Of course, an Irish investor will still pay tax in Ireland on all of his foreign income, but Dubai cannot be blamed for this.

One of the main obstacles in this market to date has been the inherent difficulty in arranging mortgage financing. This is rapidly changing with the imminent introduction of freehold laws and the freer availability of mortgages is likely to continue to drive price inflation in the region for the foreseeable future, as is the nature of some of the more mind-boggling schemes that are presented to investors. .

One of the things that most concerns many people about the whole of the United Arab Emirates is not the fact that there is inherent political instability, there has been no history of this in the region since the transfer of power from the British in 1971, or even before that time. It really is more a matter of some of the entities surrounding the Emirates not having a similar reputation. It may be difficult to convince those unfamiliar with the area how little this has affected it thus far. Obviously, there is nothing to say that some undesirables will not choose to focus on the region because of its Westernized liberal policies or its rich oil reserves, based mainly in the neighboring Emirate of Abu Dhabi, but advocates say that it is very possible that it is in more danger. anywhere near Shannon and thus tends to ignore this possibility.

Another argument against investment here is the lack of democratic political structures. The Maktoum family have been very benevolent rulers, but not everyone in Dubai agrees with their vision of the future. The case for a single focused governing entity can be seen most visibly in the ease and speed with which large new projects can be examined and executed, this simply does not happen in the democratic world. The other side of this coin becomes more obvious if you disagree with the actions taken by this unquestioned authority. Not everyone is comfortable with such irrevocable powers, but many countries’ experiences with democracy and its ability to serve the common good haven’t exactly been alluring, so I suppose you can argue either way.

The skyrocketing of Dubai home rentals is obviously seen as a boon to real estate investors, but should not yet be seen as the market norm as very little of the planned property has yet been built in the Emirate. As it stands, the low-paid workers are already out of the local rental market, where rates increased by around 40% in 2005. The rate increases were so large that the ruling Maktoum family stepped in to limit the rise in rental rates. rent. This highlights something that may become a bigger problem over time. While Dubai is experiencing a construction boom, the trend is almost entirely towards luxury apartments and villas, leaving little accommodation for unskilled and semi-skilled workers, mainly from India, Pakistan and the Philippines. Even if the emirate is successful in its attempts to make this the Mecca for all tourism-related traffic in this region, it will be necessary to accommodate such workers, but there currently appears to be no incentive to supply products for this important sector of the market. .

Traffic is also currently a huge problem in the city with traffic jams arising at just a minute’s notice, and this is before most of the property has been built. You would shudder to think what levels of traffic there will be when the entire building is finished. The lack of a reasonable public transportation system doesn’t help much, but plans to build a monorail system to alleviate the problem are sure to bring smiles to the faces of all Simpsons fans.

Unlike most cities in the world where property is built to meet a growing need, Dubai is the complete opposite, which makes it so hard to pin down. Long-term plans laid out for the city by the almighty and revered Maktoum family drive real estate development. This, in turn, invites investors to buy into a market that has basically been designed from scratch. It is this blatant invitation to investors, usually a very bad sign of a market, that bothers most people about Dubai. Due to the unique way in which the Emirate has chosen to populate its territory, it is difficult to see how else it can find buyers for the large number of properties it intends to build. However, Larionovo’s Ray Norton is quick to point out that there are more than 100,000 expats per quarter applying for visas to enter the country, driving demand for property here along with the huge rush of investors into the market. It must still be recognized that the very new and unique nature of this market has led to almost mass hysteria over new project launches with some selling out within hours.

This obviously leads to spiraling prices and the scenario of properties changing hands many times before they are built. Such activities have given the Dubai real estate market a bad name in some quarters, but are seen by others as an open invitation to invest and prosper. Whether Dubai suits you as an international property buyer will depend entirely on whether you see the plans for the city going forward as visionary or a reckless attempt to game the mechanics of the property-based market economy. It is too early to say which side will be proven correct, but it will be very interesting to see how this new and unique market develops.