The Current State of Dubai and What is in Store For
Property Investors
By Simona Coates
When one considers Dubai's property market, there are two very
distinctive sides to the real estate market that should be
considered separately...
There is the off plan property sector, which in the opinion of
many property experts, the "near-term will see profit potential
softening as the ability to realize profits from buying and
flipping throughout the development process requires ongoing
strong demand from other property investors for this sort of
property stock - and that demand is just not as evident in the
market as it once was."
It is likely that high levels of straight investment into the
off plan property market will diminish in the near future.
Alternatively, there is the established marketplace, which
encompasses the resale and rental of completed property stock,
and accordingly, due to the demand for property in Dubai, the
levels of inward migration the emirate (as a whole) witnesses
annually, ensures that this marketplace will continue to attract
investors seeking immense profit potential.
One aspect, however, of major concern to the entire property
sector in Dubai is `affordability'.
With the aid of better finance products for buyers and the fact
that Dubai's government has increased rental rate caps for
tenants, the question of affordability can at least be
maintained and kept at reasonable standards and rates.
Looking to the longer term, Dubai is in a position to support a
"mature, well rounded property market which will be of longer
term interest to investors rather than shorter term interest for
speculators."
A recent survey by DSL Exhibitions suggested that "Dubai's
residents feel the city has been inundated with luxury
properties and there is greater need for more moderately priced
property. Is this likely to have an impact on developers, and if
so, what effect will this have on property prices and investors'
profits?"
This particular survey was poised to query a representative
demographic conglomeration of Dubai's population; there were a
high number of UAE nationals (20%) and Indian nationals (60%)
questioned in this survey, but neither group is currently being
specifically targeted by the majority of developers in Dubai.
Although Dubai requires many more affordable housing units, it
is highly unlikely that developers are going to target the more
affordable end of the market, simply because there is no need
for developers to do so. While there are still buyers snatching
up the developments, it is obvious that developers have no need
to accommodate other areas of the property market, also, why
would they settle for less profit when far greater profits are
guaranteed to developers through the construction and sale of
luxury developments.
The Dubai government will need to enforce the construction and
implementation of affordable housing. Should the government get
involved in this, they will have limited direct impact on the
luxury end of the market, as each end of the spectrum is of
attraction to a different buyer types, investors and even
developers.
Dubai's political authority has a rather strong agenda. The
government is on a mission to create a "sustainable, affluent
and attractive multi-dimensional destination and if any
situation arises to undermine the long term ambitions it holds
for the emirate then it may well intervene."
The fact that the government in Dubai has long term plans for
Dubai and its surrounds surely indicates the incredibly
ambitious nature of the current Dubai government.
The recent governmental intervention by capping the rental
return rates to ensure the prevention of rental rates
spiralling out of control, was a decision which was long
considered by the Dubai political authorities.
By increasing the rental rates caps, the government has ensured
they protect its residents and citizens, as well as protecting
the Dubai economy whilst pulling the reins in on inflation.
Investors should make a consorted effort to understand the
government's objectives, principles and vision, and should
definitely not fear the government in Dubai, and its agendas.
According to most property experts, "Anyone now looking to
enter the property marketplace in Dubai would be best advised to
consider committing to the long term for attractive rental
yields and steady property price appreciation. Those who wish to
realise immediate income should purchase well located resale or
completed apartment stock in the vicinity of the central
business locations or townhouses and villas in attractive
residential communities and/or within easy distance of
international schools."
All in all, one can safely assume that Dubai is most definitely
an economy and property sector worth investing in, in the long
term and short term.
About The Author: Property Select www.propertyselect.com offers a comprehensive selection of overseas Property in Dubai, news, members club and reviews of the latest property developments.
