Why Investors Are Still Buying Property in Dubai
February 26, 2010 by admin
Filed under Tourists Attractions
Some doomsayers are warning that the property boom in is now over, thanks to an oversupply of property in Dubai. While this may indeed be the case across some parts of the emirate, certainly as far as apartments are concerned, overall demand for property in Dubai, which initially stimulated international appetite for UAE real estate, reportedly continues to outstrip supply.
Property in Dubai has witnessed robust growth over the past few years, since the Dubai government developed a strategy aimed at encouraging foreign investment, supported by the liberalisation of foreign freehold ownership of property in Dubai.
The decree was officially issued by the then Crown Prince, Sheikh Mohammed bin Rashid al Maktoum in 2002, and stems from the emirate’s desire to reduce its reliance on oil, and to diversify its economy into the financial services and tourism sectors.
With prices of property in Dubai generally low and payment terms rather favourable, the government sparked a wave of mass investment in property in Dubai from investors from all around the world. This in turn led to increasing levels of new developments and regeneration. In fact, the plans for the emirate are truly remarkable and the state’s pockets are seemingly bottomless.
Dubai’s awesome skyline is rapidly expanding, as it is one of the fastest growing cities in the world – a true global hub for large businesses. The volume of investments in new property in Dubai is expected to reach well in excess of £100 billion by 2020.
Capital growth
Prices of property in Dubai have appreciated significantly over the past few years, as demand has far exceeded supply. This has typically attracted a surge of speculators – many of which have traded in off-plan property in Dubai – buying and selling title deeds, long before ground has even broken on a new development, otherwise referred to as ‘flipping’. This is not uncommon in an emerging market, as it can prove to be a highly lucrative, high risk, way of making money.
Average prices of property in Dubai’s ‘Marina Terrace’, for example, constructed by Damac, have appreciated by well in excess of 200 per cent since the development was launched in 2002. Residential units in ‘The Waves’, also located in Dubai Marina, have appreciated by over 160 per cent per cent since its launch, also in 2002.
Cluttons Middle East reports that the average price of property in Dubai stood at between £90 to 100 per square foot in 2004. Today, that figure stands at close to £250 per square foot.
Alex Upson of Cluttons Middle East says: “A one-bedroom apartment in The Greens sold by the developer in 2004 for approx £75,000. Today the same unit changes hands at £250,000.”
Although capital growth has now generally slowed, average prices of property in Dubai continue to grow at an impressive rate, currently appreciating at annual rate of around 15 per cent per year, according to Middle East business provider, AME Info.
However, with so many off-plan projects now nearing completion, there is a genuine fear that there may soon be an oversupply of property in Dubai and that the phenomenal level of growth recorded in the past cannot be sustained.
Not so, according to some market experts. “Investors who enter the market now will be able to snap up a property in Dubai for far less than if they wait until a later date, says an AME spokesperson. “Furthermore, buying property in Dubai early will allow owners to enjoy considerable capital appreciation.
“Sitting on an asset that is rising in value makes obvious sense. The boom in property in Dubai is far from over, as all the drivers of growth in the market are firmly in place”
Upson supports these views, adding that the residential market remains “very active”, due to growing demand for property in Dubai from end-users. “If buyers are looking for growth then current demand appears to be exceeding supply and prices continue to rise,” he says. “However, we urge caution and always recommend thorough research into comparable property prices and developer history. Delays in delivery should be expected.”
Construction delays are one of the biggest risk factors of buying property in Dubai. Earlier this year Middle East developer Rakaa Properties estimated that 40 per cent, or $160 billion (£79.5 billion) worth of total construction projects in Dubai have so far been suspended, due to rising material costs, which in part is fuelling soaring inflation levels. Construction delays are also holding up the supply of property in Dubai, which could very well culminate in further capital growth over the coming years.
In fact, 57,000 properties in Dubai were due for completion last year, and yet only 11,000 residential units were actually delivered, according to Peter Riddoch of Damac Properties.
Nevertheless, the volume of land being purchased in the emirate is increasing – up 170 per cent in 2007 to reach $48 billion (£24billion), illustrating the fact that there are plenty more developments in the pipeline. Much of this land is being purchased by Britons, who are now the leading foreign owners of land in Dubai, according to a report compiled by the Dubai Land Department.
Major developments
Nakheel, which is currently constructing The World, among other projects, has announced that it plans to build the ‘Universe’. The project, which will be situated off the coast of Dubai, in between Palm Deira and Palm Jumeirah, will take up to 20 years to construct.
Other spectacular projects recently announced or already under construction, include the £395 million Palazzo Versace, Trump International Hotel & Tower on Palm Jumeirah, and the world’s first rotating tower, the latter scheme, an 80-storey skyscraper, will see each floor spin around a central core, offering residents an ever-shifting view of the Persian Gulf.
Buy-to-let
Anyone wishing to invest in buy-to-let property in Dubai should expect to achieve an annual rental yield of eight to ten per cent, according to Riddoch. However, investors in rental property in Dubai should avoid prime developments, as they tend to offer relatively low rental returns.
The greatest returns from rental property in Dubai can be found in The Palm Jumeirah and Old Town Burj Dubai, according to UAE estate agency Asteco. However, the largest rental increases are being recorded in the cheaper areas in and around International City. Comparable data shows that the greatest annual rental increase of property in Dubai has been recorded in International City, where average two-bedroom apartments have appreciated by 36 per cent year-on-year.
The declining cost of finance to buy a property in Dubai could yet boost the market further. This is because the UAE Dirham (AED) is fixed to the US dollar, which means that the currencies do not fluctuate against each other and remain fixed at one value. Consequently, the UAE Central Bank has to follow US interest rates, which currently stands at 2.25 per cent. This effectively devalues the local currency, it also lowers the cost of borowing money to buy property in Dubai, which can lead to higher property investment returns.
Moving forward it’s almost impossible to forecast what will happen to the market for property in Dubai. The sheer volume of new homes coming onto the market suggests that it’s not long until there is an oversupply of property in Dubai, if not already the case. However, the emirate has one of the fastest growing populations in the world.
It’s reported that up to 857 people are moving to Dubai every day, totalling some 5,000 per week. In fact, Peter Riddoch of Damac Properties estimates that around 60,000 people will be looking to purchase property in Dubai this year. He also reports that Dubai’s workforce, which currently stands at around two million will grow to around five million by 2015, undeterred by the likely introduction of VAT next year.
One thing is for sure – Dubai will keep growing.
Dubai Internet City – A Dubai Property Development Guide
January 26, 2010 by admin
Filed under Tourists Attractions
The UAE’s answer to Silicon Valley, Dubai Internet City (DIC) has earned itself a prestigious place in history as the world’s first complete Information Technology and Telecommunications center to be constructed inside a free trade zone.
The Vision Behind the City
Wanting to establish itself as the information technology hub in the region, DIC was created in an audacious attempt to attract international technology companies to the UAE and the rest is history!
The phenomenal success story that followed the creation of Dubai Internet City is unprecedented. Some of the 200 giant international conglomerates already licensed in the DIC include Compaq, Microsoft, Cisco, Intel, Oracle and IBM. Most of these corporations are moving their entire regional headquarters and projects to this newly established high-tech Internet City.
The fact that so many reputed conglomerates have already set up base here has sent several other companies from all over the world clamoring to claim a space of their own.
The Driving Force
As with so many of the other successful property development projects, credit for this ambitious and innovative project goes to Dubai’s Crown Prince and Minister of Defense, Sheikh Mohammed Bin Rashid Al Maktoum.
An astute businessman one of the UAE’s most successful entrepreneurs, Sheikh Mohammed Bin Rashid Al Maktoum has been the driving force behind the transformation of Dubai from a barren desert town to the leading trade and tourism destination in the eastern Arab world. Establishing Dubai as the leading Information Technology center is another successful notch under his belt.
Laying the Foundation For The Success Story
Business-friendly, family-friendly, stable and with the best infrastructure for commerce in the whole of the Middle East, Dubai city itself is the perfect setting for the new Internet City. It is supported by a skilled work force that is made up of professionals from over 70 different countries.
Acknowledged as the world’s first free trade zone for e-commerce, some of the noteworthy features of Dubai Internet City include:
- 100% tax exemptions
- 100% foreign ownership
- Protection for intellectual property rights
- State-of-the art networks and connectivity
- Research and development centre
- Exhibition facilities
- Science and Technology park
- Crime-free environment
- Hassle-free environment
With the proposed Internet University, Dubai Internet City will have achieved another ‘first’ in a long line of many.
The Layout of Dubai Internet City
A profusion of lush, colorful gardens that surround every building does much to soften the harsh desert atmosphere and add a charming campus environment to Dubai Internet City. If you did not already know it, you’d never believe that this thriving, well-tended landscape comprising verdant lawns, cerulean lakes and colorful flowers was entirely man-made.
It does not matter however; what matters is that it serves the purpose. In the words of Rowland Griffiths, Cisco’s regional director, “When you look out of the window and see green grass and lakes it gives you a nice feeling just to come to work.”
Dubai Internet City – Placing Dubai Firmly On the Technology Map
A growing demand by businesses striving to enhance their efficiency and productivity and also by Arab governments keen to upgrade their outdated systems, Dubai Internet City has placed Dubai firmly on the world technology map.
How is Gay Life in Dubai
Same-sex relationships are illegal in Dubai and are, officially, not tolerated. If you know the “right” people and the right places in Dubai, there is plenty of gay life. Some of the gay spots in Dubai you can even read about in the Spartacus Directory. However, you can’t compare the gay life here in Dubai with that of Western Europe. Here, it’s almost all “underground” and there are risks involved.
However, many gay people do live in Dubai and, as long as you’re quiet and don’t draw attention to yourselves, you should be fine. Finding other gay people is, however, a big challenge. It can be a problem to find hotel allowing gay people to order one bedroom with one bad, or to rent some other Dubai property for their vacation. However there are many gay men & women there, and as long as they don’t flaunt it publicly everywhere you go, there is no problem whatsoever. The only places they can sort of “let your hair down” is in the nightclubs. Otherwise, it’s better to keep a neutral profile when going around town.
There are, obviously, officially no gay bars and those in the past that have germinated have been swiftly closed down with deportations following with equal swiftness. But anyway the gay scene is up and happening around many nightclubs in the city. It’s one of the many things in Dubai: everyone knows about it, but nobody makes it “official”.
Dubai’s first publicly advertised gay club night the Diamond Club’s gay “Fluff Night” featured a transvestite DJ from Birmingham, England, and a “best-dressed transvestite” contest showed example of importance being “not official”. Alerted to the gay event by the thousands of publicity flyers distributed by the party’s organizers, local authorities closed the club for “violating Islamic laws and indulging in immoral activities”.
The order to close the club, issued by Dubai’s Crown Prince, General Sheikh Mohammed bin Rashid al-Maktoum, was also seen by those in the region as a public demonstration of the governments disapproval of homosexuality. According to the International Lesbian and Gay Association, consensual sodomy in Dubai is punishable by up to 10 years in prison, although punishment can be more severe if defendants are charged under Islamic law, rather than under the secular penal code.
Very often police raids parties and arrests men in countries like UEA where homosexuality is illegal. Hormone treatments are used in an attempt to “cure” gay men and turn them straight. The same is in Egypt, where once famously arrested more than a dozen gay men attending a boat party, a move that led to international condemnation and criticism from the European Union. Also in Saudi Arabia arrested more than 30 men for taking part in a gay wedding party.
However UAE were warned that any attempt to administer hormone or psychological treatment to foreigners would break international law. A police spokesman in Dubai answered on this that the foreigners were likely to be deported, while the Emirati men could be given hormone therapy if they consent.
The censor in internet sites in Dubai is pretty tough. Almost all of the websites concerning gays are blocked. Gaydar is totally blocked except for their French language version (a strange phenomena that I haven’t figured out yet). Every website that has the word “gay” or “sex” is blocked. While Etisalat has blocked many gay web sites, some of the paid message boards are easily accessible. Who said Dubai doesn’t have a night…er …gay life.
Dubai Formation: Business Set Up In UAE
October 8, 2009 by admin
Filed under Restaurants
Dubai is the best Emirate for a business set up in UAE.
The East and West blend quite happily, side by side in Dubai’s social arena. Dubai has branded itself as the most happening place for tourists with its dozens of signature restaurants and trendy hotels. HH Sh. Mohammed Bin Rashid Al Maktoum, The Ruler of Dubai stated recently that only 10% of his vision has been visible to us. So what a ride we are in for!
Dubai, one of the 7 emirates that form the United Arab Emirates, is a income, corporate and wealth tax free nation. For years it has been known as a shopper’s paradise.
It started as sea faring, pearl recovering, poor nation. But the visons of Sheikh Rashid and then his son, Sheikh Mohammed, have driven this small emirate, first to export gold and electronics to various high import tax countries, then to become a trading hub and banking center for South Asia, East Europe and most of Africa people.
Now it is poised to take its place as an international financial center, a health care hub for the Middle East, and a leisure destination for the world. This emirate will become the Switzerland of the Middle East for banking, and Monaco, for the rich and famous who want to live in a tax haven.
So you can ask yourself: Why am I not there?
But consider the business dynamics. Dubai is located in the Middle East exactly in the center time zone between Singapore and London, the only country with the vision to become the financial center between these 2 major financial centers.
It is surrounded by a target market cachement area of more than 1 billion Arab speakers and another billion South Asians. Which just happens to be one of the fastest growing markets in the world. A Dubai formation allows you to tap into this market from Dubai, a nation with a well developed communication and transport infrastructure apart from an internationally accepted banking system. All this right in the middle of various politically troubled countries.
This emirate is in the center of a prosperous market. Over the years, it has established good trading links with Gulf Cooperation Council countries, Iran and neighboring markets. A Dubai formation offers excellent port and airport facilities in terms of size, flexibility and efficiency and can be considered to be the best in the region.
The strength and dependability of its shipping and transportation sector has attracted leading freight forwarders, shipping companies and insurance companies. In fact a Dubai Logistics City on the border of the largest airport are currently under construction in Dubai!
A Dubai formation with its pro business government policies is ideal regarding establishing of regional headquarters of companies. It is one of the most liberal regulatory governments and it offers features that are very conductive to trade.
9/11 has been a key driver for the change in Dubai. After 9/11, as the West became more stringent in doing due diligence for Arab travelers and granting of visas became limited, the oil prices began to sky rocket. But the rulers of the Middle East no longer were enamored with investing in the US or Europe and started looking at creating investment opportunities in their own backyards.
Freehold real estate was born. Now sand could be rapidly converted to gold! The maximum number of licenses being issued for Dubai formations, which used to be for trading in the past are now for something to do with real estate.
Forming a corporation in the UAE is not only challenging but rewarding too. The challenges can be termed as
a) procedures related to business formation are not so clear,
b) establishment fees charged by the government are very high
c) the UAE bureaucracy is considered to be opaque.
However global entrepreneurs get incorporation help in terms of local corporation tax waiver on their profits thereby enabling them to earn tax free profits on their Dubai formation through the various double tax treaties.
As it is a highly competitive economy business setup in UAE requires high capital investments.
The International Institute For Management Development report 2005, Dubai ranked as the 17th most competitive economy of the world.
Investors should have a minimum budget of US $ 50,000 for forming a corporation in the UAE. Business setup in UAE takes between nine to 14 weeks of time and it largely depends on the type of company that is to be formed.
As it is considered as a developed country with its overall life expectancy, literacy, education and living standards (as per United Nations Human Development Index) and with the incorporation help that it provides in the form of free zones to foreign investors desirous of 100% ownership, UAE is the perfect destination for global entrepreneurs for Dubai formation of companies.
