When buying a Dubai property investment it should be for the long-term
2005 I think it is safe to say was the year of Dubai property when it took centre stage in the overseas property marketplace. Continuous media coverage of The Palm development, The World islands, Burj Dubai and much more has firmly put Dubai on the property investment map.
In 2006, more gradual price increases continue to keep property buyers interested with real estate prices still a bargain up and in many cases 50% cheaper when compared to those of Western Europe and the US.
Everyone when investing abroad sees it as an investment in some shape or form and it is individual circumstances which govern your final property selection. As clichéd as it sounds ‘Location, Location, Location’ is the foundation for a good investment. There are many in the overseas property industry that believe certain types of property in Dubai is in oversupply, namely middle to up-market apartments. When these properties complete in 2007, there is a general feeling that their entry into the marketplace is likely to lower rentals and at best maintain current Dubai property prices.
This short termist viewpoint has meant the bonanza of buying Dubai property off plan to flip seems to have slowed down considerably with speculative investors realising that Dubai’s property market dynamics, much like the hare and the tortoise are now a slow but sure affair. A Dubai property crash is unlikely as many developments are controlled by the Dubai Government. The ultimate property winner in Dubai it seems will be the person who buys now with a view to renting and paying off a mortgage long-term. In time, Dubai rental yields and real estate prices will climb to meet those of established international city hubs.
A further boost to this theory is the prospect of monetary union which the GCC (Gulf Cooperation Council) hope to introduce by the year 2010. Of course, the consensus is that a single GCC currency will subsequently be favourably revalued against the US dollar. This newly aligned currency should provide a positive upward boost to Dubai house prices.
Purchasing pre-construction off-plan remains a popular route to investing in a new property in Dubai but there are a number of factors which need to be considered carefully. Take the launch Emirates Gardens Phase 2, location and property type go hand in hand and depending on the location, certain properties command differing premiums due to type of market they appeal to. In particular, success of developments has been noted in projects such as The Meadows and Springs, which have actually completed and potential investors have an opportunity to see the living environment of the actual development as such off-plan sales in later phases commanded higher prices.
