As one of the states which makes up the United Arab Emirates, Dubai is often assumed to be an oil rich state like neighboring Saudi Arabia and the like. It may surprise many to find that less than 3% of the state’s income is derived for oil revenues (indeed it is forecast that the countries oil reserves will run out within 20 years). The state has however reinvented itself as a tourist attraction and service based economy.
The buildings of Dubai are some of the highest and most beautiful in the world, and the state prides itself on construction projects which seem to push back the boundaries of the construction world Dubai also boasts the largest man made harbour in the world, which has helped to increase the amount of trade which moves through the area. The property market in Dubai though has been hard hit by the global financial recession and there is still no end in sight as consumer confidence has been hardpressed by the lack of funds and the shoddy service of real property estate managers.
While there have been historical issues about humans rights and the standard of policing, these areas of society have very much improved of late, However, it is essential that all foreign nationals respect the customs and laws of what is still predominately an Islamic state.
This area of the world has become very popular with Expats living in Dubai and working for Western companies looking to set up branch offices in the area, or arrange trade paths. It is seen as a useful door between the West and Middle East markets, which often have a volatile relationship.
Property Market Performance in Dubai
As you would expect from a state with population of less than 1.5 million, the property market can be somewhat unpredictable, and often volatile. The area is a mass of ongoing construction projects, although many of these ventures have already been pre-sold or instigated by Western companies looking to house their workers in the region.
There are few places in the world like the Dubai property market, where prices are sky high yet the demand and inflow of immigrants continues. The May 2002 law which allowed foreign investors to become more active in the local market, seems to have alerted many investors to the potential of the area. There have been some very large property deals completed over the last few years, which have often restricted natural supply to the market.
While many of the population are buying their own houses in Dubai, a number are also looking at renting properties (with rent charges up by 30% over the last couple of years) which is in turn putting further pressure on the already sky high property market. It is true to say that the property market of Dubai is still very much in its infancy, and when comparing prices against those in more fashionable areas of London, Dubai prices are often only 30% of the prime London property prices. The market in Dubai is still depressed though but the agents who work the market have continued to be upbeat that the market will eventually turn better despite current dismal times.
With this, Dubai is very much on the up, with masses of new property projects still ongoing though at a slower pace. A useful investment for those looking to relocate long term, although the decision may not be as easy for those looking at only a short-term stay.
Property Costs in Dubai
Dubai is a fairly unique country in that there are not really any direct taxes with regards to the property market (or indeed the economic market). There is however the cost of appointing a representative to assist with the local laws and rules – a cost which can be negotiated at the time of appointment.
When you seek to purchase property in Dubai, it is best that you engage the services of a real estate agencies involved in the development of the project. Another option is to search the Internet before making a decision. An expat shared their thoughts on purchasing property in Dubai at the Dubai Expat Forum last July 8, 2009:
Accommodation is still expensive, despite the drop in prices over the past few months. Ensure that you get a big enough housing allowance to cover your rent, or factor this in with your basic salary. Fewer people get hefty housing allowances these days. Ralism is finally creeping in and it is now more common to pay quarterly, six monthly, or even more frequently in a few cases. Many employers will advance rent from salary.
The area where you choose to live should largely be dictated by where you will be working. Rush hour traffic can be very bad, so best to minimize journey times. Prices vary between areas and the type of development you choose.
One bed apartment – from AED 70K
Two Bed apartment – from AED 110k
Villas – 3 bed – AED 200k average
Villa 4 bed – AED 300k average
Villa 5 bed – AED 400k average
Unlike in many other countries it is common to live in apartments. Most decent buildings have a pool and a gym.
Useful article from Time Out in November 2008 regarding the different areas. :Time Out Dubai – City Guide, Information, Events, Reviews & What’s On in the City of Dubai