Invest in Dubai Property
We look at the fundamentals that now underpin Dubai’s property market, and why new legislation makes it a stronger place to invest.
It’s a market synonymous with its historic growth and its spiralling lows.
Young though it may be, Dubai’s property market has already experienced the kind of journey few others can rival. Its rise was legendary, but its fall came to symbolise the impact of the 2008 global economic downturn.
Today it’s a market on the verge of new growth. But it has learnt the lessons of the past.
No more speculation. Dubai’s property market is just like that of any major city around the world, built on solid foundations and one that investors can enter confident of longevity.
Here’s why investors can now approach Dubai with more confidence and excitement than ever before:
Increased government regulation
In order to correct the market, and ensure all future growth is based on natural market drivers and not speculation, the Dubai government has introduced a number of key measures in recent years to regulate the emirate’s property sector.
The following have helped to stabilise Dubai’s property market and move it in line with the world’s most mature city markets:
Investor Protection Law:
A framework that, among other things, entitles investors to a full refund should a developer fail to complete or handover a property in a certain time frame, ensuring only the most reputable developers now operate in the city.
Doubling of property registration fees to 4%:
Higher deposits prevent the ‘flipping’ of off-plan properties and ensure investors do no borrow more than they can afford to repay.
Mortgage lending caps:
The UAE Central Bank has reduced the loan-to-value provision to just 80% for Emiratis, and 75% for expats.
Code of Corporate Governance:
Developers, along with all small and medium-sized enterprises in Dubai, must adhere to a framework that sets internationally high-standards of governance. Stakeholder relations play a key role in this and ensure that all developers are “committed to a sound relationship built on respect, trust, honesty and fairness”.
Reservation agreement restrictions:
Part of the Investor Protection Law framework, investors must have registered their sale and purchase agreement with the Dubai Land Department (DLD) before they can sell their property.
A market underpinned by key investment fundamentals
Just like any other global market, investment success is based on securing real estate driven by three integral components:
1.Location
A number of key location-based factors can help drive real estate values in Dubai, including:
Proximity to key business districts: Real estate positioned close to the thriving workforce of Downtown and DIFC, one of the GCC’s integral business hubs, generates yields as high as 8%, some of the strongest in Dubai.
The desirability of the district: Real estate in key districts and communities such as Dubai Marina and Downtown often generates the most demand and commands the highest rental premiums. As, also, do those situated close to new projects such as the Dubai Water Canal.
2.Quality
Purchasing property constructed and maintained to the highest standards helps to protect the longevity of your investment.
The introduction of new government regulations triggered many of these less than reputable developers to leave Dubai, and now investors can be assured that those in operation today boast the city’s finest examples of architecture in their portfolios.
Dubai is home to some of the most iconic names in Middle Eastern construction and development. Properties built by renowned developers with a proven track record of delivering quality will ensure that the end result of any off-plan investment will be of impeccable quality.
3.Supply and Demand
“Invest in an area of high demand and low supply” is a key investment adage and never has it been more pronounced than in Dubai.
Property in desirable communities such as Dubai Marina, for example, are highly sought after but, with many of the last remaining plots in the Marina having been completed and sold, any unit that becomes available is often tenanted quickly and is able to command strong rental rates.
Additionally, investors should look at the supply/demand imbalance between particular types of property. Downtown, for example, has a very low supply of studio apartments in comparison to other areas of the city, yet it is this type of accommodation that many of the district’s young professionals want and need.
Article by Select Property.
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