Interesting area, very buoyant at the moment, but do you really know all about the property market in Dubai?

To say this is an interesting post is an understatement, it sets off as a normal run of the mill pros and cons post but suddenly all of the hidden elements of the Dubai property market come into play and it maybe does not look as straight forward as you might have thought.

It is pointed out on a number of occasions that Dubai has been, and continues to be, one of the few safe havens in the property market at the moment. The area is on the up, oil revenues are flying high and businesses are being attracted to the area in droves bringing with them more and more personnel. But is the property market getting a little over heated? Is it due a correction?

The general consensus seems to be that construction is currently a little ahead of demand and at some stage price rises will start to slow down. However, when you also consider the new companies looking for exposure to the area (US giant Halliburton was mentioned) and the fact that you can affectively buy a visa with your property there is a feeling that demand is not about to start slipping at the moment.

On a more basic level it seems as thought the laws which govern the property market, tenant’s rights, etc, are not as clear as they should be and could see the number of rental disputes increase unless this is addressed.

Summary

While Dubai has been one of the darlings of the property market for some time there still seems to be a level of demand currently not seen any where in the world today. The tax regime is very attractive to investors / those who want to move to the area and it seems as though more large corporates are eyeing up a base in Dubai. This has all led to a massive influx of foreign money and a seemingly endless demand for property in the area, even though the property market is fair from cheap.

However, one of the more worrying elements of Dubai is the fact that the laws which govern the property market are fairly vague and open to interpretation in many areas, something which has seen a number of rental disputes of late. There is also an interesting observation about the life of a property in Dubai and the claim that it is only 25 years due to the extreme weather conditions. While this is not something which seems to have been covered in many property sales brochures it may be something to investigate further.

Dubai, like many other areas of the middle east, is riding high on the crest of the oil wave at the moment but even prior to the hike in the oil price it had been attracting growing demand. When you throw in the tourist market in Dubai and the growing number of visitors there is plenty to be positive about in the short term. Whether prices have moved ahead a little too quickly is a different matter although some are looking for a small short term correction as a possible buying opportunity.

Read the full thread on Investment in Dubai.

Every so often we see a few posts which offer a different angle and approach to the norm, this is one of those posts which brings together a mass of information, views and reviews. The original poster has asked forum members to forecast the price per square foot in 2010 for property in Dubai Sports City, Jumeirah Village and another 4 locations in and around the same area. The post has received some very interesting comments and views which show how opinions are so very different between different people – similar to an ‘is the glass half full or half empty’ scenario.

While there have been many comments and forecasts as to what the price of property will be in the areas mentioned, some have gone further and actually given a break down of their reasons and analysis. The basis of the cost structure in the market has also been covered in great detail with many highlighting the fact that developers are starting to factor in rises for construction costs and passing these on to buyers.

There is a very healthy mix of positive and negative views and predictions, and while the truth may be somewhere in between, they are very much food for thought. The thread has also highlighted what investors believe to be the better of the regions mentioned and why they feel this way, with others taking the contrary view and looking at specific markets which are due a ‘catch up’ period. It is advisable to read the majority of the posts to get a balanced opinion, but there is certainly enough information and comment to keep readers busy for some time.

Summary

If we all had a crystal ball wouldn’t life be so much easier?

As we touched on above this thread has provoked a large response from those in the forum with many more than willing to come forward with their predictions for property prices in 2010 and their reasons. Even though it is near impossible to predict what prices will be 1 year’s time let alone 2 years, there are some very sound and interesting comments.

However, perhaps the more striking characteristics of this thread is the changing views of those who may have posted upon creation back in April and have reposted some weeks or months later, and those who have joined the thread late. Opinions are changing as the worldwide and local economies change and this is being reflected in the not only the price predictions but comments for the future direction of the markets.

There seems to be a growing consensus that short to medium term there is good growth left in these markets but as the supply / demand ratio starts to level off prices may well start to slow. The region is a boom time at the moment with new ventures being announced on a regular basis and many investors heading for what some are seeing as safe havens at the moment.

In summary there is some very useful information, views and comments on this thread and it seems to have caught the imagination of the masses. While there is no consensus on prices for 2010 this is not unexpected as this is what makes a market.

Read the full thread about the future of property prices in Dubai.

The central focus of this thread revolves around the question of a member who asked for advice on selling or holding on to his property at Jumeirah Beach Residence in Dubai Marina District. Different viewpoints have been given by some members about this.

Some members opted to hold on to the property since the location is a popular beach destination and other attractions near it pose as an excellent place for short-term rentals. However, they also mentioned that the ideal time to rent out the place would be between 1-3 years since prices are unstable because construction is yet to be completed. Aside from this, during the waiting period, a good assessment of trends in the property market can be done.

On the other hand, some members felt that selling the property at this time is a good option. This is based on observations regarding the demand and supply of properties within the Marina District.

There is a possibility that the supply may exceed the current need for properties by the year 2010. This, in turn, can result in a so-called “market bubble” bursting. Thus, other members have agreed that selling the real estate while its popular is ideal, but it still poses no guarantees.

Due to the great influx of villas and apartments located along the Dubai Marina District, questions regarding the strength of the local property market have been posted. It may seem that these properties are elegant and attractive in their own unique way, but more than how much the market can only absorb should be considered.

With numerous structures on the rise within the region, this may tip the scale to an oversupply. With this escalating circumstance, investors are then thinking twice about their transactions and commitments with the said projects.

Although the recent demand has caused more construction, the demarcation line between supply and demand still indicates the last say about Dubai Marina’s present situation and its future stand as an emerging market.

Learn more about sell-hold properties in the Dubai Forum.

Discussions found on this thread essentially evolved around claims that Ajman is viewed by some as the next market to follow the property boom that has taken over the emirate of Dubai. As expected, this argument created two groups that provided varying support to the emirate’s investment potential and its ability to reach the status that Dubai is presently enjoying.

Members that supported Ajman as the next property market to contend with and flourish even view it as a most probable event since Ajman offers relatively low property prices. Plus, it is one of the locations next to Dubai that offers freehold titles to its property buyers. With a host of first-rate development projects on the way that should attract more buyers, Ajman has may have reached the point where Dubai was once seated, eventually causing property prices to rise and ultimately leading to a thriving market.

On the other side of the argument, some members claim that although Ajman drives itself up with its property developments, the city still lacks an ultimate appeal as a property hotspot for investors. Hence, the primary concern that members raised is the state of infrastructure that the emirate of Ajman currently possesses. With no more than two main roads that lead to Dubai or Jebel Ali as well as the inadequate road facilities, the city’s infrastructure does not give justice on the property developments that are found within it.

Another point raised by some members is that the rental market in Ajman is relatively unknown. For people who are keen on investing in the rental market and has money to spare, Dubai would be a safer location to invest on.

In addition, the competition with other Dubai projects would not lead to much capital appreciation as compared to properties in Ajman. Hence, supporters of this argument stipulate that Ajman properties are most ideal for personal use or for family residences and should not be associated with significant rental returns and capital appreciation, yet.

Despite such gloomy predictions for the Ajman property market, a window of opportunity presented itself for making substantial profit from Ajman properties. Thus, buying early in this emirate’s property development location is one way to obtain significant capital returns due to the anticipation for property price growth.

The surge of developments in Ajman has brought many claims about its effect on property buyers. Being the smallest out of the seven emirates and situated along the UAE’s western coast, it has driven investors to build various uniquely elegant structures and complexes. It is even said that Ajman is already capable of providing luxury and comfort at a very reasonable price.

Moreover, the Ajman government has implemented special benefits that would suffice all international and local investments, particularly with its trade and industry. In this regard, the government issued its new property law. This falls under the Amiri Decree Numbers 7 and 8 of 2008 wherein Sheikh Humaid Bin Rashid Al Nuaimi, the current Ajman ruler, issued this law in order to regulate the region’s property and land sectors. Furthermore, this law actually legalizes freehold ownership of properties and land for both GCC and UAE citizens along with the public stocks of certain companies.

Since the main investment field of Ajman is real estate, investors perceive Ajman’s variety of commercial and housing towers, marketing centers, complex estates, hotels, and housing estates mean fewer risks when it comes to their investments. Ajman’s Free Zone also provides investors with incentives and facilities together with a guarantee of 100% foreign ownership and 100% repatriation of profits and capital. There is also the guarantee of a 20-year tax-free operation and the absence of personal income tax.

With all these advantages given to its investors, the property sector of Ajman is being pumped with billions of dollars. This is also related to the real estate prices that have currently jumped from $95 up to a whooping $136 per square foot in just a span of six months.

Learn more about Ajman in the Dubai forum.

The main concern raised in this thread is the escalating issue of “unhappy migrant workers” in the Gulf region along with the severity of this issue in Dubai. These hard laborers are faced with somewhat debasing living conditions and wages despite the vital role that they play in supporting the region’s economic growth through building a lot of mansions and skyscrapers.

Although it is a reality in Dubai, most members do not feel that this issue would not have any significant impact on Dubai’s economic progress. There will always be 10000 workers more to replace the 1000 who will leave according to some members. Furthermore, the Dubai government will certainly take steps in keeping such issues from escalating so as not to adversely affect the country’s economy. One specific example that has been cited by members is the building of low cost housing in order to cool down the emirate’s property boom.

Nonetheless, several members feel that the Dubai government should take steps in providing these migrant workers with decent working and living conditions as well as wages that they rightfully deserve. This is despite the reality that there is a surplus of workers that could replace the “unhappy” ones. Thus, as the city is largely dependent on migrant workers, Dubai should be a forerunner in responding to issues such as these as well as to their rights as a whole.

Hence, Dubai and the entire region itself have been criticized for years for its labor standards. In fact, most of its workers speak of systematic exploitation. The recent riot of restive workers last 2007 and the negative press that it created in the city, amidst its presentation as a world-class business and tourist hub, has given embarrassment to its government. These workers were faced with high recruitment fees that make it difficult for them, apart from the long work hours, the minimum wage that is incompatible with the emirate’s market economy, and the withholding of their salaries in order to keep them from leaving. Moreover, conditions such as confiscation of passports, the absence of medical insurance, and cramped employer-provided houses located in the outskirts of the city lacking in facilities for the most basic needs have become prevalent in Dubai.

Certain intervening steps have been taken in order to address these concerns beginning with the Labor Ministry’s involvement. This is to ensure that regulations are properly observed, especially in construction sites and living quarters. Authorities have also mandated companies that their workers’ wages should be placed in bank accounts that they will monitor and check from time to time. Moreover, a draft labor law will soon be presented to the cabinet, thus allowing provisions for the government to reject applications from importing companies who have records of violations. This law also enables the government to increase its fines for companies who desist making improvements and to shut down companies who are repeat offenders.

Despite these changes, such conditions are still yet to be seen and felt. The government’s greatest challenge, at present, is the implementation of these reforms along with other obstacles such as persuading companies to make improvements while maintaining the sector’s phenomenal growth, which is estimated to be worth billions of dollars.

Moreover, soaring land prices have also hindered the construction of labor camps that have wider spaces and better hygienic conditions. In addition, though workers can now sue their employers in court if they miss their wages, rulings for these cases seldom result in payment.

There are already some efforts from the private sector for these so-called improvements. However small it may be, it is something that may become big later on. Thus, The Dubai Industrial City, as part of its supportive services, will be featuring 7 residential complexes that will provide affordable and high-standard accommodations for workers and their supervisors. Upon its completion in 2008, these labor cities will cover an area of 14 million square feet and accommodate 87,500 beds. Albeit these labor cities are commercial developments, such steps could result in a better involvement of the government along with the private sector into the plight of these workers.

More information about the burdens of constructions workers in Dubai in the Dubai Forum.

Foreigners are given free title holder ownership for properties in Dubai. This is actually one of the driving forces in the emirate’s thriving property market. However, much confusion exists when it comes to the procedures for land titleship and ownership, most particularly when it comes to resale properties. The thread was an attempt by members to shed some light on this confusing system, which is based mostly on the experience of veteran members.

An informal step-wise instruction for resale procedures was offered at the discussion wherein it entailed the following steps:

1. buyer1 buys direct from the developer
2. buyer1 decides to re-sell property at a premium price
3. buyer1 sells directly or through an agent
4. Buyer1 and buyer2 negotiate price, terms, conditions, etc.
5. buyer1 and buyer2 draw a Memorandum of Understanding drafted by a lawyer – stating the agreed price, price validity, payment details, terms and conditions, project and ownership details, time to transfer, penalty Claus, etc
6. both parties should sign the MOU and buyer2 should seal the contract with buyer1 through a token/deposit amount, which is the amount and method agreed upon by the two parties
7. buyer1 will make an appointment with the developer regarding transfer of ownership
8. before actual transfer, buyer2 will handover payment check plus premium check in whatever mode stated in the agreement
9. both parties will sign transfer and assign some forms inside the developer’s office
10. no transfer fees should be paid to the developer in this procedure
11. If payment of property were at 20% to 30%, this obliges the developer to take buyer2 to the Land Department so as to change title deed and make the transfer official.

Albeit an illustration of a step-by-step procedure, most members felt that the government has yet to implement clearer rules and regulations on reselling properties. In view of this confusing procedure, most members advised the use of a reputable lawyer and a professional agent who will stand in the middle of each transaction so as to ensure that each party abides by the MOU or MOA.

Thus, as a rule of thumb, when purchasing a property in Dubai, every property transaction should pass through the original developer. This is to ensure that a buyer actually owns what is being sold. This is a common step which buyers and sellers should practice due to the fact that it serves to protect the buyer from any dispute on the ownership of the property being bought. Plus, this is important because Dubai has yet to provide an independent registry of freehold titles which can be available for inspection.

For any dispute with regards to the ownership, buyers can only take their case to court, which is really a time-consuming process. In addition, there is no guarantee that the ruling of the court will be in their favor. In fact, the transaction can be declared void.

Therefore, practicing due diligence and involving the original developer is absolutely necessary so as to safeguard any transaction until the publication of a comprehensive Dubai Property Law is mandated.

Learn more about the resale procedures in the Dubai forum.

2008 has gained much speculation from most forum participants regarding the state of Dubai’s property market. Before the start of the year, there was a prediction that the supply and demand percentages will meet, especially once the imminent number of distressed property sales will become inevitable. Members also speculated that such an event is most likely since every market is really expected to mature.

However, most members contended that the rising cost of building materials, labor fees, and overhead expenses are enough to keep the prices up. In addition, the insufficient supply of affordable man power furthers the delay of the demand and supply curves’ meeting point. Moreover, developers are having difficulties in delivering their projects on time.

Hence, should there be a price correction? This will not really affect the long-term investments on major urban developments. Despite the city’s relatively low property prices, Dubai is poised to become one of the world’s major international cities. This is because of the tourist attractions and activities found in the city along with its open doors for foreign investments. This also means Dubai will never lose the attractiveness of its real estate market.

As the year approaches the end of its second quarter, the points mentioned above may be worth the consideration, especially while pondering on an investment in Dubai’s real estate market. In every investment, research and accurate information are necessary in making a wise decision. Thus, since Dubai’s property market is relatively new as compared to other major cities like London and New York, which had gone through various cycles, speculation is generally part of the real estate industry.

Thus, many analysts have contended speculation about the Dubai property market as being similar to “a bubble that is waiting to burst”. They have based their predictions on the strong responses of buyer’s of such Dubai properties. Hence, the steady growth of the emirate’s population is basically due to the immigrants and foreign workers who continuously visit and migrate to this amazing city. Aside from this, the market is not affected by the current slow down of the US economy.

As predicted by the Egyptian Investment Bank, prices should continue to rise by 5% up to 10% due to the shortfall of housing supplies. Analysts predict that this trend will continue until the end of the year or until the prices swing back in favor of buyers. This is because over 120,000 units will be delivered in the next two years. Moreover, a predicted cumulative decline in the prices should be around 15% up to 20% between 2009 and 2011.

Yet, despite such predictions, property buyers will not be completely deterred in purchasing properties in Dubai. In order to keep their property’s market value, buyers should focus on locations that are presumed to be in continuous demand until 2009 and beyond.

More discussion about the 2008 standing of Dubai’s property market in the Dubai Forum.

Another first of its kind, the Dubai Sports City is a specially constructed city that is entirely dedicated to sports and recreation. It will comprise of the best facilities for a wide range of sporting events, with commercial space and residential areas interspersed amongst all of it.

The major sport structure in Dubai Sports City is the 60,000 seat multipurpose outdoor stadium, which would primarily be used for athletics such as cricket, football, and rugby. Other structures includes a 5,000-sseat field hockey stadium, a 10,000-seat indoor arena, a 25,000-seat cricket ground, and an 18-hole golf course designed by Ernie Els.

Dubai sports City offers luxury living, while maintaining an active lifestyle. The freehold properties of The Cube, Oasis Tower, and Gallery Villas, provide the buyer a choice between an apartment and a villa, as well as the choice of living in a quiet street or overlooking a lush golf course. The luxurious developments of Emirates Hills, Arabian Ranches, and Victory Heights offer villas that overlook the golf course. All the other developments of Design Tower, Champion Tower IV, Century Tower, Links View, Golf Greens Tower, Tennis Tower, Hub Champion Tower III, Rufi Twin Tower, Golf Tower, Canal Residence, Hub Golf View I, Champion Tower II, ,Shami Tower, Golf View II and Elite Residence provide great options for small families and frequent visitors seeking for a holiday home. Continue reading ‘Sports City in Dubai’ »

The thread started with an interesting inquiry on members’ forecast on the future property prices in Jumeirah Village, Dubai Sports City, and City of Arabia–all of which are some of Dubai’s newly accomplished and most anticipated property developments. Also included in the thread are the predicted property prices on some of the city’s currently successful and much sought-after properties, of which includes The Greens, Old Town, and Dubai Marina.

The predicted values that resulted in the thread were based on the mixed views of the members on the direction that these prices would take in the following years. Some commentators purport that by the end of the, decade the supply and demand ratio would level up, consequently slightly decreasing the property prices. Others take on a more positive view, stating that in spite of a tendency to become a buyer’s market and a subsequent slight decrease in prices, overall rates wouldn’t fall as it would take some time before the supply finally crosses the demand. In addition, the ever increasing costs of constructing new buildings would also add up to the property prices.

To read more about Dubai property prices in 2010 see the Dubai forum.