Never has there been such an ambitious and creative drive to establish a property market as has been witnessed in Dubai over the past three years. Running short on oil reserves, Dubai's crown prince, Sheikh Mohammed Al Marktoum, set out to turn Dubai into the financial, commercial and tourism capital of the Middle East and in the space of three years he has more than succeeded. The result has been the rise of Dubai as the world's most glamorous property investment market. Nothing in Dubai is understated. The tiny emirate, that only five years ago was nothing more than a simple fishing village has suddenly become the Manhattan of the Middle East.
Dubai's more exclusive developments are being snapped up the celebrity classes and the world's elite. Ageing English rocker, Rod Stewart is already the proud owner of Britain and villas along the Palm are being bought by sports stars, film stars and anybody with upwards of EUR1.5 million to spend on a private waterfront retreat.
For the property investor seeking a lucrative return, a new market is always a risky one and the fear is that the market may collapse soon after it has taken off!. With plenty of anecdotal evidence to suggest that property prices in Dubai are rising by as much as 60% in one year, it's tempting to rush straight in and grab a piece of the action. But the canny investors will have to consider if it is too much too fast.
The pace of the properties in Dubai make is a speculators dream. It's not unheard of for properties to have been transferred up to a dozen times even before the building is complete. Many opportunistic investors are booking 10 to 20 villas in new developments, selling them at significant profits before they have been completed.
Cashing in on this and perhaps in an effort to cool the market, builders are charging a fee of up to 7% each time a property is transferred and lending institutions are trying to keep some control on the market by agreeing to finance only the original sale price. In the secondary market, prices can exceed the original price by 10-70%, depending on the development's popularity.
In comparison to other new and emerging markets, such as those in Central and Eastern Europe, accommodation in Dubai appears to be a more attractive investment. Prices in the middle market are comparative to those in Eastern European cities such as Tallinn and Krakow. Unlike these countries Dubai has the sunshine factor and a glamorous edge, which is surely contributing to the high immigration from Europe, the Gulf Region and the Indian subcontinent. Over 100,000 extra people are expected to arrive in Dubai every year. Such large-scale immigration is sure to sustain the property rental markets.
Despite the current boom and huge immigration into Dubai cautious investors are raising understandable questions about the security of ownership in the UAE. UAE allows individual emirates to issue their own legislation to regulate ownership of real property. While Dubai is committed to encouraging overseas investment, they rule by decree and decisions can be changed overnight the whim of the current ruler. The government has promised that freehold would be granted in the near future. So, if you are a real estate lover then this will a great chance to make some profitable investment in Dubai Marina apartments, villas, Dubai homes or any other property.
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