Dubai and oversupply
I am often approached by international investors who shy away from Dubai. Reasons range from the region is too unstable to Dubai has built too many properties for any meaningful capital growth.
I have just returned from Dubai and seen for myself what I always new these investors are wrong.
It is true that by 2010 the number of homes in the region is set to double to 530,000. The commercial sector is also expanding at a rapid rate with office space set to triple.
However when you look closer to how the properties are being bought you will soon find that much of the real estate being bought is with hard cash. Financing is only now getting in on the act. My office in Dubai estimate that 80% of off plan property is bought with cash. This means that unlike the majority of housing markets Dubai resilience to market changes is second to none.
Nakheel the government backed property developer Chief Executive Chris O'Donnell was quoted as saying
‘People do get a little concerned about Dubai, thinking we are just building and hoping we will sell the product on completion. But we sell product prior to starting construction. Everything you see at Palm Jumeriah has been sold"
Property Developers Dubai Properties Chief Executive Mohammed Binbrek "We do not begin until the units are sold and then we ask for a 70% deposit." When asks if he thought the Dubai market would crash with so much construction he replied " Around 40% of the population is under 20 add this factor to a population that is growing it implies much more houses.
Dubai investment in the infrastructure is enormous from a new airport that will rival Heathrow to freehold zones that are attracting international investors the region is serious about development and its future. Dubai will be the leisure, sporting and business centre of the Middle East.
Dubai is a safe place to live with low crime rates and a reputation as being an oasis of tranquility in the region. It has a more relaxed feeling of live and let live. The majority of its 1.5 million population are in fact expats and the government want foreigners to stay with residency visas issued on the purchase of freehold property.
Big business is there already and the employees have followed and a lot more are set to come to Dubai.
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