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DUBAI AND ITS PROPERTY SECTOR STILL BECKONS TO INVESTORS

Wednesday, 30 Jul 2008

It's estimated that around 27,000 residential units will be delivered by 2010, assuming there are no construction delays, against a demand for more than 100,000 homes.

Although Abu Dhabi's off-plan market presents some excellent investment opportunities - remain cautious. The risks associated with buying a home that has not been completed are far higher, particuarly in a market that lacks transparency, as the development may never be finished.

As in the words of many property experts, “The property market in the UAE is one of the most attractive markets in terms of rental yields. For property investors, self-employed professionals and others participating in this high-growth market, 'Irad' allows the opportunity to utilise rental returns to cover the cost of finance. In other words, the finance will pay for itself. This unique value proposition, with its Sharia-compliant structure and flexible profit rates, therefore offers significant opportunities for new and current investors to participate in the country's real estate success story." (Nabil Abou Alwan)

If you do decide to buy off-plan, always ensure that you purchase from a reputable developer. There are many unscrupulous operators in the property business.

There are currently 186,200 residential units in Abu Dhabi, with this figure expected to rise to 213,000 by 2010. However, Colliers
International estimate that it will not be until 2013 that Abu Dhabi has sufficient new supply of homes to cool the local market with the expected delivery of 140,000 units by that year.

Rents in Abu Dhabi are also rocketing upwards, exceeding Dubai. Colliers International report that average rents in the UAE capital city have appreciated by around 22% over the past year.
Average property prices in Abu Dhabi soared by 53% over the past year to $580 (£293) per square foot, according to Colliers International.

Yet the estate agency projects that property prices in the UAE could appreciate further over the next few months due to the continued shortage of accommodation in the country.

According to Jet-to-Let magazine, the Asian country is one of the top ten hotspots for property buyers from the UK.

The UAE was ranked eighth in the list, ahead of rival markets Brazil and Turkey and inside the top ten for the very first time.

Dominic Farrell, editor of Jet-to-Let magazine, said the popularity of investing abroad highlights the lack of faith in the British housing market.

He commented: "This reflects the perception by investors that there are better opportunities elsewhere."

Figures from the magazine showed that during the next two years, more than half of investors in the UK plan to buy a property abroad.

Dubai property expert Ryan Mahoney recently told Gulf News that local real estate professionals were still experiencing record levels of demand from both investors and home buyers.

Chief executive of Buniah Group, Mohammed Al Safeen, commented: "Rental yields in the UAE have remained high in recent years … In the coming four years; it is likely that rentals will flatten, while property values will continue to rise."

He went on to say: “the market was set to soar in such a way that any family planning on spending three years or more in Dubai would do well to purchase a property.”

However, those still looking to invest in property for sale in Dubai may be interested to know that prices have been tipped to rise.

Due to the availability of cheap capital with low interest rates and relatively high rental costs, increasing numbers of people in the United Arab Emirates are looking to buy their own properties. (Business 24-7)

This comes after the Centre for Future Studies revealed that a growing number of Britons are choosing to go to the UAE because it offers larger pay-packets and a lower cost of living.

Officials in Abu Dhabi are expecting a shortage of nearly 20,000 homes in the next year as demand grows and the population expands.

Mohamed Alabbar, (Chairman, Emaar), told the news agency that the “reason for the inflation means it is unlikely to affect property for sale in United Arab Emirates.”

The demand for property in United Arab Emirates is likely to remain strong for the foreseeable future, according to one of the leading player's in the country's real estate sector.

Several recent media articles have opined that the local property market cannot hope to continue the upward course of recent years and predicted that a correction is close.

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