1. Why Invest In Dubai ?
Property is cheap on an International level
Property is cheap in absolute and relative terms. For example, an average villa will cost around $1,000 per square metre in Dubai in comparison to London Docklands where it would cost $5,000 per square metre. There are very few modern cities in the world where similar property is priced so low.
Dubai is in the process of creating an international property market from scratch, with foreign ownership of freehold only introduced 3 years back. Thus buyers are given an exceptionally good deal to encourage them to be pioneers.
Shortage of supply
The Dubai Government is working hard to prevent a shortage of supply and is giving land to developers as an incentive. What looks like massive supply today in Dubai may be nothing compared with demand in a few years time. Dubai is after all growing its GDP by 7-8% a year and shows no sign of slowing down, quite the contrary.
Rising Building Costs
A fundamental influence on property prices are rising building costs. The low US dollar is pushing up the cost of materials from Europe, which is pushing energy prices to its peak.
Tax Free Income
Dubai is a city where a lot of people earn high tax-free salaries and are in a position to support higher house prices. This is a city with a 20 year track record of strong economic growth and will continue to attract foreign and regional inward investment.No Corporate Tax, No Income Tax & No Capital Gains Tax
International Business Hub
Long recognised as the leading regional trading hub of the Middle East, Dubai has now become an international business and re-export center. The country has developed rapidly over the past 10 years and has transformed itself from an oil dependent regional entrepot into a highly diversified international business center of global significance. Dubai is on the radar screen of the world!
Over 3.4 million tourists visited Dubai in 2001 and this figure is expected to grow to in excess of 6.0 million by 2010. Dubai is going from strength to strength.
Buy vs Rent
Any long-term resident will pay out a fortune in rent, and that money is better invested in a property. In addition, it is presently up to 40% cheaper to buy than to rent, so buying a big villa costs the same as renting a small one. The 10% down payment on a new villa is the same as the upfront annual rent payment. Rental yields of up to 10% are achievable in Dubai compared to under 5% in other cities.
Returns for Investors
Prices for properties in Dubai are appreciating steadily at the rate of 10% - 15% per annum, (for some developments even greater). It is estimated that by 2009, based on current growth, your initial financial investment is expected to at least double.
Attractive Currency Rates
The local currency, AED (Dirham) is fixed with the US dollar (3.675 AED: $1). The recent strength of the pound against the dollar means by investing now, investors are achieving a 10% - 15% ready equity compared to the same prices a year ago.
2. Why invest in commercial property in Dubai?
Shortage of completed property in Dubai and the presence and development of numerous new businesses have resulted in demand outstripping supply. This reflects on the price, which tends to increase until supply eventually evens out.
3. Should I buy or rent commercial property in Dubai?
This really depends on the short and long-term objectives of your business. Renting a property gives the tenant the flexibility of expanding the size, moving locations, or even shutting shop without having exposure to the property market. On the other hand, purchasing a property protects the occupier from rent escalations, eviction notices, or other unreasonable landlord demands and allows scope for capital appreciation.
4. Which location is ideally suited for my business?
While offices tend to be focused in locations, such as, Sheikh Zayed Road, Business Bay, and Jumeirah Lake Towers, warehouses and labour camps have been centric towards industrial locations, such as, Al Quoz and Dubai Investment Park.
5. Is buying commercial property advantageous over residential property?
In a way yes, because commercial property investment is normally much less volatile as compared to residential property. A tenant of a commercial property will be required to stay in the premises for a longer period of time than one residing in a residential property.
6. Can I buy anywhere in Dubai?
If you are a non-UAE national, you can only buy in areas designated specifically for expatriate freehold and leasehold sales.
7. Can I get financing in the UAE?
Yes, you can get finance for commercial property in the same way as residential. Both individuals and firms can borrow. Provided you have the right credentials and satisfy the simple requirements, lenders are willing to finance a purchase in a number of locations across the city.Better Commercial can help you sort out your mortgage through Independent Finance, our preferred financing partner.
8. Can a foreigner hold a freehold title in Dubai?
Yes. Freehold ownership of land and property for UAE and GCC citizens has been legalised, while allowing the same rights to non-GCC expatriates to pre-designated areas that will be approved by the Ruler of Dubai. In Dubai, commercial freehold property is available in many areas, including Business Bay, Jumeirah Lake Towers, Tecom, and DIFC
9. What additional facilities should I expect from my developer?
Visitor parking, large floor plates, business center services, retail shops, restaurants, access control, and advanced IT systems are some of the additional facilities that developers of commercial properties provide.
10. Do I need commercial space to apply for a trade license?
Yes, the business requires a rented or owned commercial property in order to secure a trade license.
11. Will I be eligible for property, inheritance, and capital gains tax?
No property, inheritance, or capital gains taxes are payable in Dubai.
12. What are the opportunities for rental yield and capital growth?
With demand presently outweighing supply, the margins for capital gains that can be achieved through the purchase of off-plan property and the high rental returns on completion make buying commercial property a lucrative investment option.
13. Does ownership of real estate in Dubai entitle me to apply for a Residence Visa?
Yes. Under Review by the UAE government.
14. What are the general steps involved in purchasing off-plan property in Dubai?
1) Complete a reservation form and include a copy of your passport.
2) Transfer the required down payment.
3) On receipt of the contract from the developer, review, sign and return same.
4) Make installment payments as per the agreed payment terms.
15. What measures are in place to protect my investment in off-plan projects?
In July 2007, the Dubai government issued Law No. 8 "Concerning Guarantee Accounts of Real Estate Development in the Emirate of Dubai". This law states that developers receiving off-plan payments for property that is not yet complete must open a guarantee account, commonly known as Escrow or Trust accounts. Payments received from buyers must then be deposited in these accounts, which are operated by approved banks. In order to withdraw funds from such an account, the developer must apply to the trust account manager with documentary evidence from an approved consultant that an agreed stage of construction has been reached. The Dubai Land Department, who oversee the enforcement of this law, must be informed every time funds are being released from the account to the developer.
16. What are the average returns on investment when buying property in Dubai?
17. What is RERA?
The Real Estate Regulatory Authority - RERA - has been formed under the affiliation of the Dubai Land Department recently. RERA will regulate real estate activities in Dubai (including the escrow law). With administrative and financial autonomy, RERA will supervise and regulate real estate developers, real estate agents, financiers and co-owners' associations.
18. Why have RERA and Escrow laws been founded?
RERA and escrow laws have been founded in order to eliminate the risks involved in Dubai real estate market hitherto. These had amounted to Property developers with no clear title to the development or the corresponding land.
- Lack of a proper record of real estate related activities in Dubai
- Lack of uniformity in rules and regulations concerning real estate
- Risks in the mortgage market that go against the property buyer's interests
- Uncertainty involved in the completion of a real estate project.