Dubai a spectacular place to invest

By: Nicholas Marr

Dubai is a spectacular place to visit and to enjoy the warmth of its people. What is even more impressive is the developments that are taking place their. These include the world's biggest theme parks, the world's tallest buildings, and the world's largest shopping malls the list goes on and on. Most of the housing available to international investors is available off plan or pre construction. People have been making huge profits already as prices soar owing to construction cost increases, demand and because many developers sold too cheaply.

International investors buying property in Dubai include Russian, British Indian and Pakistani investors. A percentage of United Arab Emirates buyers along with other Middle Eastern investors got in on the action early. One notable section of international real estate buyers is the United States.

Seasoned investors have speculated about the bubble bursting in the Dubai real estate market. Oversupply has led to concerns by overseas property investors. In 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, so who is going to buy all this real estate? Dubai Property Executives explain how Dubai is as good market with a better future and allay fears of the apparent oversupply in Dubai property.

Nakheel developer Chief Executive Chris O'Donnell ‘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" The Australian born CEO goes on to explain that his company will not commence a project until it has reached a threshold percentage that gives them a cash flow to enable them to build.

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.

Jones Lang LaSalle executive Mark Thomas specialises in the residential market his response to worries concerning over supply was "We are asked that every day the answer is that demand from overseas is still coming. What has happened is price appreciation has slowed from 30 to 40 per cent to 10% per year. Land sale prices are holding up and are active"

The current rental yields on Dubai real estate are high by global standards at 7-10 per cent which reflect the fact that this is a new and immature market. In the long run a return to rental yields more in line with comparable international markets should be expected.

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