Buying Property in Dubai

There are very few with even a passing interest in property abroad who won’t have read something about Dubai and its unique property market by now. It has only been open to foreign investors since 2003 and freehold ownership is not due to become an option until later this year. Dubai, which is the second largest of seven Emirates forming the United Arab Emirates (UAE), has a population of 1.67 million, 80% of which are ex-patriates. As Arab states go, and even by UAE standards, Dubai is probably as liberal, stable and Westernised as they come. There are no problems for women whatever they choose to wear, religious tolerance is the order of the day and drinking of alcohol is not prohibited, although public drunkenness is seriously frowned upon so it may not be the ideal venue for your upcoming stag party.

In terms of financial attractions for both developers and investors they don’t get any stronger than Dubai, tax-free status is as good as it gets. As Ray Norton of Larionovo says, “the tax situation here tends to be a fairly short conversation, there are zero taxes on pretty much everything.” It is easy to gloss over the effect that this has on attracting incoming economic activity until you take a quick look around Europe and see the effect that dropping corporate tax rates to 15% has for a country. This will give you some hint of the attraction to Dubai. Kofi Annan recently went so far as to label Dubai ‘an economic miracle’ so the Emirate obviously has friends in high places. It is essentially a tax-free zone in its entirety and this fact has not been lost on the corporations of the world. Of course an Irish investor will still be taxed in Ireland on all their overseas income, but you can’t blame Dubai for this.

One of the main drags on this market to date has been the inherent difficulty in arranging mortgage finance. This is rapidly changing with the impending introduction of freehold laws and the chances are that freer availability of mortgaging will continue to drive price inflation in the region for the foreseeable future as will the nature of some of the more mind-boggling schemes being presented to investors.

One of the things which most worries many people about the entirety of the United Arab Emirates is not the fact that there is any intrinsic political instability, there has been no history of this in the region since transfer of power from the British in 1971, or even before that time. It is really more a question of some of the entities surrounding the Emirates not having a similar reputation. It can be difficult to convince those unfamiliar with the area how little this has affected it up to this point. There is obviously nothing to say that some undesirable won’t decide to focus the region because of its liberal Westernised policies or rich oil reserves, based mostly in the neighbouring Emirate of Abu Dhabi, but advocates claim you may very well be in more danger located anywhere near Shannon and thus tend to ignore this possibility.

Spiralling rents for homes in Dubai is obviously seen as a boon for property investors but it should not yet be viewed as the norm for the market as very little of the planned property in the Emirate has actually been built yet. As it stands, low-paid workers are already priced out of the local rental market, where rates increased by around 40% in 2005. The rate increases were so large that the governing Maktoum family intervened to cap rising rental rates. This highlights something which may become more of a problem with time. While Dubai is witnessing a construction boom, the trend is almost completely toward luxury apartments and villas, leaving little accommodation for unskilled and semi-skilled workers, mainly from India, Pakistan and the Philippines. Even if the Emirate succeeds in its attempts to make this the Mecca for all tourist related traffic in this region it will be necessary to accommodate such workers but there don’t currently seem to be any incentives to supply product for this significant market sector.

Traffic is also currently a huge problem in the city with traffic jams sprouting at just a minute's notice, and this is before most of the property has even been built. You would shiver to think what levels of traffic will be present when all the building is completed. The lack of any reasonable public transport system doesn't help much but the plans to build a monorail system to alleviate the problem will surely bring smiles to the faces of all Simpsons fans.

Unlike most world cities where property is built to service a growing need, Dubai is entirely the reverse, which is what makes it so hard to pin down. The long term plans laid out for the city by the all-powerful, and highly revered, Maktoum family drive property development. This in turn invites investors to buy into a market which has basically been engineered from nothing. It is this flagrant invitation to investors, normally a very bad sign of a market, which bothers most people about Dubai. Because of the unique way in which the Emirate has chosen to populate its territory it is difficult to see how else it can find buyers for the vast amounts of property it intends to build. Ray Norton of Larionovo is quick to point out, however, that there are more than 100,000 expats per quarter applying for visas to enter the country pushing demand for property here along with the huge investor rush into the market. It still has to be acknowledged that the very new and unique nature of this market has led to near mass hysteria on the release of new projects with some selling out in hours. This obviously leads to spiralling prices and the scenario of properties changing hands many times before they are even built. Such activities have given the Dubai property market a bad name in certain sectors but others view it as an open invitation to invest and prosper. Whether Dubai suits you as an international property buyer will depend entirely on whether you feel the plans for the city into the future are visionary or an ill-judged attempt to fiddle with the mechanics of property based market economics. It is far too early to say which side will be proven correct but it will be very interesting to watch this new and unique market unfold.

It is in the section of Dubailand, designated as ‘Sports City’, that Larionovo have most recently released products and with the Irish fanaticism for all things sporting who would doubt that they will have much success with this venture. This particular area is central to Dubai’s stated aim of becoming less reliant on oil for its income and ever more reliant on tourism. This section of the Emirate, which is currently occupied by useless sand (it’s not even good enough for building), has been exclusively designated to house most of the attractions being built to generate a viable tourist stream in the years to come. Looking at some of the projects which have been, and will be, launched here you have to take your hats off to the ingenuity being exhibited. The Snowdome is a case in point. Who else in the world would even consider placing a huge glass bubble in the middle of the desert so that locals and visitors alike can engage in all things snow related?

The residences situated in Sports City are all in close proximity to various sports stadia and academies. Some of the highlights of Sports City include a Manchester United Soccer School, a Butch Harmon School of Golf, several David Lloyd Tennis Academies, an ICC Global Cricket Academy and a Championship Ernie Els Signature Golf Course called ‘Dunes’. There will also be dedicated cricket and hockey stadia, cycle tracks, a 5 star sports medical hospital, spas and health clubs as well as a selection of multiplex cinemas and the obligatory selection of shopping-malls, cafes & restaurants.

Larionovo has sole Irish rights to Victory Heights and Gallery Villas, two exclusive villa communities laid out among the greens and fairways of the ‘Dunes’ golf course. The 3 and 5 bedroom townhouse style Gallery Villas are available from €355,000 to €425,000 for 2,444 sq. ft and 4,553 sq. ft. properties respectively, while the luxury Victory Heights villas are on the market for €560,000 for four bedroom 3,750 sq. ft. properties, up to €957,000 for the top-end 5 bedroom 4,500 sq. ft. villas.

Norton says: “The first phase is already 70% sold out to wealthy Dubaians and investors from the Gulf Cooperation Council (GCC) states, and Irish investors now have the chance to join them.” Commenting on apartment options in the development Andrew Brett says: “We’ve had a major input into the design and layout of the buildings which means you’ll find our apartments much larger than most on offer elsewhere in Dubai, or even elsewhere in Sports City.” Apartment prices in Sports City start from €86,000.

If you are at all interested in the market it is at least worthy of a visit, something now made much easier with direct Aer Lingus flights from Dublin. It is certainly a unique experience which should be savoured at least once in a lifetime.

For further information contact 1890 252 138 or visit www.larionovo.com.

 

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