Not just year-round sunshine

Inexpensive prime property and strong growth make Dubai an attractive realty investment destination for BritonsPorush Jhunjhunwala

For many British expatriates, the UAE is their first experience of living in the Middle East. More than 100,000 Britons reside in the country, 65,000 of whom live in Dubai, according to figures from the British Embassy. Like London, the emirate has evolved into a global financial hub and dynamic centre for international trade, along with being home to a thriving expatriate population including some of the world’s wealthiest South Asians.

The UAE has become so popular with British expats that it was ranked as their third-favourite destination to live and work in for the second consecutive year in the latest NatWest International Personal Banking Quality of Life Report, behind Australia and Canada. The ranking by the UK’s largest retail and commercial bank is a remarkable leap from 2011, when it came tenth.

Top reasons for this include a good working environment, high disposable income and excellent career prospects. While people in the UK are getting taxed by 20-40 per cent on their earnings, they get to keep their entire income in the UAE, which, in many cases, is higher than the average salary for the same job back home.

Unavoidable taxes

Times are changing and the UAE is becoming a permanent home for an increasing number of Britons, especially after the announcement of the capital gains tax for non-resident UK homeowners. Starting from April, British expats who want to sell their UK property will have to pay capital gains, currently at 28 per cent. To be specific, nonresidents who have spent less than 90 nights in their UK property in a tax year will not be able to treat it as their main residence. This means they will no longer qualify for private residence relief, under which any profits are exempt from tax when the property is being sold. Residences held through companies have been liable to the same tax since 2013. Although it is too early to say how the tax will affect the London market, some suggest that foreign owners of UK property will sell before the April deadline.

With prime property in Dubai substantially cheaper than in central London, and rental yields higher — having grown by 10 per cent last year according to Abu Dhabi Islamic Bank — we can see where the trend is going.

This could also explain why more than 19,000 British investors have bought more than 30,000 properties in Dubai worth Dh57 billion, as per Dubai Land Department (DLD) statistics. Last year alone, Britons invested Dh9.32 billion in Dubai property.

Dubai goes to London

Transactions worth Dh300 million are expected to take place during the inaugural Dubai Property Show from Friday to Sunday in London. The optimism expressed by the organiser, Sumansa Exhibitions, reflects a high level of confidence not only in Dubai’s real estate market but also in the attendance numbers — the event is anticipated to draw at least 2,000 buyers from among eight million Londoners as well as millions of Europeans. Some of Dubai’s largest developers, including Dubai Properties, Emaar, Damac, Deyaar and Al Barari, are showcasing existing and off-plan properties at the DLD endorsed exhibition.

Olympia London, the show’s venue, is an iconic architectural landmark dating back 126 years. It is the only venue in London with a dedicated rail station — Kensington Olympia — and has recently undergone a £30-million (Dh169.6 million) redevelopment.

As a participant at the Dubai Property Show, Banke International expects to see potential investors, end users and new business partners coming in. They will have the opportunity to explore one of the world’s fastest-growing real estate markets and even secure lucrative prelaunch deals.

The year to buy

While several predictions point to flat house prices in London for this year, and others indicate a slowdown until 2019 with a forecast growth rate of 3.5 per cent for this year, Dubai’s property prices are expected to witness a moderate rise of 5 per cent.

The anticipated growth will occur on the back of investments in infrastructure projects such as the Al Maktoum International Airport in Dubai World Central, as well as numerous property developments, including Habtoor City and the Dubai Creek project, both of which are expected to be completed by next year. By 2020, massive projects such as Meydan City, Downtown Jebel Ali and the World Expo 2020 master plan should all be ready.

In the nearer term, mid-range suburbs, particularly Jumeirah Village Circle, Dubai Silicon Oasis and Dubai Sports City, which offer relatively affordable rents and convenient payment plans, are expected to see growth driven by demand from end users. The reality remains that by international standards, Dubai’s prime residential property market is relatively inexpensive and offers more value for money. This, combined with the fact that the UAE’s economy and employment rates continue to grow strongly, suggests that the prime residential market in Dubai is likely to see ongoing expansion.

Read more about International real estate.

Source: Porush Jhunjhunwala, Special to Property Weekly

Porush Jhunjhunwala is Director at Banke International Properties, a boutique real estate brokerage based in Dubai.


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