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Dubai's property sector has emerged as one of the most diverse markets in the world.
People from around the globe flock here in huge numbers to live, work and invest with a long-term perspective, giving the city a second-home status.
What are the major factors that make the Dubai real estate market increasingly attractive to international investors?
In line with the changed perception of investors, this market continues to showcase strong performance and improved liquidity.
It is anticipated that the momentum will sustain through the next five years as the emirate prepares to host the Expo 2020.
Dubai's lower interest rates, lucrative yearly rental yields in the range of four to seven per cent, security, tax-free returns on investments of around 20 per cent, a regulated market structure and attractive payment options drive global investments in huge numbers.
The key advantages offered by the Dubai property market vis-à-vis other markets lie in the fact that investors here do not have to deal with complicated documentation and provisions related to income tax as there are no personal or income taxes in the city.
Quick transaction procedures ensure that international investors, as sellers, get their money (cash) in 10 days or 45 days in case of a mortgage.
With zero per cent capital gain taxation and no property tax, the profit margin is much higher, making the Dubai real estate market a far more rewarding venture compared to other countries.
Moreover, the Real Estate Regulatory Authority (RERA) has applied the highest standards of transparency for the market to exercise the best control on transactions and to regulate interactions between investors and real estate agents.
Sheer professionalism and transparency in the Dubai real estate market encourage and instill confidence in those interested to invest in the emirate.
The Dubai government has consistently and proactively invested in building its infrastructure to support its diversified economy.
The fundamentals of the market are strongly aligned with the tourism sector, the air travel network and investments in local infrastructure.
The cherry on the cake is Dubai's cosmopolitan lifestyle, making it a magnet for international tourists and residents. From multi-cuisine restaurants to world-class shopping malls to vibrant nightlife and entertainment, Dubai has become a home away from home for globetrotting investors.
When it comes to the advantages of buying a property here over investing in other markets, it is quite evident that the current options and price levels available here are very attractive in comparison with those in other cities.
Savvy investors have recognised the growth potential of investing in Dubai and reaping the rewards soon after, both in capital growth and rental return.
A healthy level of new supply is expected to enter the market over the next year or so, which also means that prices are not expected to skyrocket anytime soon.
Also, with a large number of speculative investors being weeded out, the market offers a good opportunity for foreign investors.
Off-plan projects are typically cheaper and may be available with better financial terms (with lower down payments) and post-handover payment plans, while ready-to-move-in projects have the advantage of being available immediately.
All these facts reflect an ongoing upside trend and a positive growth in performance of the Dubai real estate market.
Source: Manish Khatri, Special to Freehold
The writer is VP - Sales & Business Development, SPF Realty