With the growing population of Dubai increasing daily with new businesses starting, finding that home in Dubai has become extremely difficult. With currently around 3000 Dubai properties under construction including many super towers, many companies are finding problems obtaining reasonably priced Dubai properties for people to live in with certain areas of Jumeriah and Dubai Marina being the only places available to rent now. Recently my company was quoted ,000 for a year’s rent for a 3 bed property for an ordinary guy with a wife and 2 kids, looking to start at new life in Dubai. Many Landlords who got on the property ladder at the beginning of the property boom in Dubai are making fortunes with the rent of the properties that are now ready for occupation.
With new development calls for the office and commercial space this is certainly no exception, likewise rental prices have risen significantly for completed offices and often a bidding war taking place. New commercial releases are being snapped up even though they are overpriced by many investors looking to cash in from this shortage of rental properties.
The cheaper alternative is Ajman, a neighboring emirate. Properties can be found quoting a 25 minute journey time into Dubai , sounds like a great option but with construction traffic and employees commuting to work the road is gridlocked from 5am through to 11.00 am .It is hoped by the locals that the new Metro tram system which comes into operation in 2009 will take some of the traffic off the road, until then if you want rental property be quick because it is certainly a first come first served basis.
In 2002 Dubai made modifications to its constitution and passed the freehold law that allows for the freehold ownership of real estate in Dubai by any foreigner. And ever since then Dubai has become an international hotspot for property and the demand for real estate has exceeded the supply. Having said that there is doubt that at present Dubai is probably the safest bet for making overseas property investments.
Dubai has always been known for extraordinary architectural developments and breathtaking designs, and one such example of architectural intelligence is world’s only 7-star hotel situated in Dubai. Demand for property in Dubai is so intense that property prices have seen considerable appreciation in the last two or three years.
Why the Real Estate Market in Dubai is heating up?
You must be wondering what caused this sudden rush for property investments in Dubai. The main reason behind this sudden increase in demand for real estate in Dubai is the fact that property laws in Dubai allow freehold ownership of land by any foreigner. Property owners can sell or rent out the property whenever they want. Ownership of freehold property also entitles the owner to a 3 year renewable residence visa. But this law applies to only a certain designated areas in Dubai. And the other big reason for this surge in real estate market in Dubai is the fact that no taxes are applied on income or property transactions in Dubai.
The other reason that can be seen as the driving force behind the real estate market in Dubai is the presence of a huge number of multinational companies. And these multinational companies have created a lot of jobs in Dubai; therefore the people working with these MNCs are either opting for rented accommodation or buying their own houses. This has considerably increased the demand for both the rented and owned property and which in turn has increased both the property prices and monthly rentals. Also property investment in Dubai is very simple and requires minimal paperwork, and sales agreement is all that you need to buy property in Dubai.
One of the most popular property developments in Dubai is Damac Heights; the 90-storey splendor designed by top designer house ‘Aedas’. Overlooking the Palm Jumeirah, this 8th man-made wonder offers the most exclusive penthouses, duplexes, 3, 2 and 1 bedroom apartments in the world.
Damac Properties are the largest private master developers in the Middle East offering the most exclusive Dubai Real Estate, Dubai Freehold Property and Dubai Investment Property for sale.
Since 2002 the real estate market in Dubai has seen rapid growth. The reason behind this was the change in ownership legislation that was passed by the governance post 2002.
The main point of the legislation change was to allow non-nationals to own property outright freehold in the region. This as an effect has had a resultant effect of bringing large investment into the region and attracting a large amount of foreigners into the region.
Due to the tax implications of working in the area (100% tax free) amongst other things Dubai has attracted a massive amount of workers in to the region.
With this initial massive influx of workers and individuals into the area there was a gross under supply of housing in the area, and this has had the effect over the past few years of raising property prices as well as rents to unprecedented levels in the region. Residential property values are still rising in the region but at slower levels seen over recent years.
With developers like any business observing this aggressive appreciation being achieved in the property market in Dubai larger amounts of developers started to build ever more opulent as well as quantities of accommodation to cash in and also satisfy demand.
What many are starting to believe now is that this demand that had fuelled the growth in the property market was mainly fuelled by investors speculating and not end users.
Also there will be a large amount of developments that will reach completion over 2009-2010, so many are believing that these factors combined will cause a correction in the market due to an over-supply in the market.
So the main factors that will determine if a correction is imminent in this region is going to population growth, and skilled at that. If Dubai can continue to support an expanding skilled workforce who can afford the high housing costs then we can expect to see potentially a stabilising of the market if not then I would assume a potentially large correction in store specifically in Dubai.
This has been one of the reasons that many investors have started looking at other less developed Emirates undergoing growth to invest in property.
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May 15, 2009 12:45 pm | 
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