You can’t keep Dubai out of the news. Be it the wondrous structures that the emirate keeps churning out or some hotshot celebrity out and about in the city’s sparkling center, Dubai finds a way into the headlines one way or another.
But the recent rounds of headlines have not been that great, contrary to reality. Market crash, falling prices and declines have been some of the negative terms hurled at the real estate sector by naysayers.
The Dubai real estate market has indeed seen a slowdown in growth when compared with previous two years, when prices almost went skyward.
Since then, the authorities have introduced several measures, such as a hike in transaction fees and mortgage caps to help the market avoid overheating. This has resulted in the market filtering out short-term pundits eyeing overnight gains and has left the field empty of serious, committed investors.
International inclination
But real estate players around the world know better than banking on negatives, and they focus more on the actual prospects. Although the prices have eased out in some areas of Dubai, rental returns remain strong as ever, which makes now the ideal time for finding a buy-to-rent option in Dubai.
This is why international investors have continued to have an interest in Dubai, and investment keeps pouring into its real estate market.
Figures from a recent study conducted by Bayut.com, United Arab Emirates’s (UAE) leading realty Web portal, revealed that there was no let-up in demand for Dubai’s real estate from investors from India, China and the United Kingdom. (Full disclosure: I am the editor at Bayut.com.)
The study said the leads generated from each of the three countries vis-à-vis rental spaces registered noticeable increases in the first eight months of 2015 (January to August) compared with the same period last year.
Rental leads from the U.K. went up 4 percent in the said period while there were 10 percent and 7 percent more rental leads generated from India and China, respectively.
Flat demand
The website’s study further said that there was a noticeable hike in leads generated for apartments across Dubai within the aggregate demand in the rental segment.
Leads generated from the U.K. for rental apartments went up a whopping 22 percent in the first eight months of 2015 in comparison with the same period in 2014. The leads from India went a step further and posted an increase of 26 percent, while those from China remained somewhat stable.
The study said the reason for the increase in rental leads was attributable to increasing employment opportunities in Dubai.
With several new realty, recreational and hospitality projects being launched ahead of the mammoth Expo 2020 and the emirate planning to create over 250,000 jobs by then, it’s no surprise demand for rental accommodations continues to find a solid footing in Dubai.
Dubai demand
The persistent demand for rental spaces has opened a vast window of opportunity for investors to cash in on the housing need, and easing sale prices make the proposition all the more lucrative.
The government’s measures have steered the emirate’s realty market toward calmer waters and are helping it turn into a mature market devoid of rampant flipping and frenzied speculation.
It’s on its way to becoming a market capable of withstanding short-term pressures and sustaining medium- to long-term gains. It has found a trusted aide in a continuously diversifying economy that will keep attracting professional expats and provide a healthy demand for housing and accommodation.
Jumping in
For a foreigner looking to invest in Dubai’s real estate sector, the steps are easy. The emirate’s authorities have set up numerous freehold areas that are open for investment by anybody — from any part of the world and with any nationality.
However, only Emiratis or residents of Gulf Cooperation Council can buy properties in areas other than free zones.
You don’t need any formal approval to buy real estate in Dubai, and if the property purchase is worth more than AED 500,000 ($136,000), you automatically become eligible for a residency visa.
The UAE real estate sector is completely tax-free. Be it a piece of land, a penthouse in Dubai Marina or a warehouse, no tax is levied on the income generated.
However, a property transfer fee of 4 percent is levied — something worth consideration.
Investors should always demand documents such as land title deed, escrow account number, Dubai Land Department approvals and an agreement with the contractor from a property developer before making the booking.
Single-cheque advance annual payments are a norm across the UAE. That means foreign investors usually turn up in Dubai once a year, get some sun and fun and head back to their country of residence happy. It’s as simple as that.
The rental yields in Dubai are among the best in the world, and buying-to-let is the normal way of profiting from the emirate’s realty.
For those looking to start a business, a license is all you need. The permit will let you maintain a limited workforce. But you can sponsor as many people as you like if have a UAE national as a business partner. The licenses vary depending on the sector of investment.
With an array of projects in the pipeline, Dubai’s real estate market offers prospective investors thousands of options to choose from based on their budgets and needs.
Dubai is cooking something for everyone. The question is, are international investors willing to find out if the proof is in the pudding?
Azam Mahmood Butt is the editor at Bayut.com, the UAE’s leading real estate portal.