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Property investment increasing in Dubai

 

Fears of a property bubble in any country can have a negative effect on the marketplace, but despite Dubai’s 2008 property crash, international organisations have started to invest within Dubai’s recovering property investment sector once again. Many people are now concerned that escalating property prices could destabilise Dubai’s economic strength and infrastructural stability.

2014’s revitalised level of demand has led to a spike in property investment and bank lending amongst professional building and construction companies, but affordability issues could counter Dubai’s success. If property market prices become unsustainable, debts and investments worth millions must be reassigned and the entire face of international finance could change overnight.

Officials have introduced some preparatory safeguards to regulate the growing supply/demand levels for property, but some investors warn that the measures could be too optimistic. Similar steps taken by Singaporean authorities are comparatively severe, so as well as the economy, rapid credit growth continues to threaten investor confidence and asset security throughout Dubai.

Dubai’s prime investment property prices have increased by more than a quarter in 2014 and rental costs have risen by little less than a third, meaning that the average property costs close to £4,500 per square metre. This might sound steep to some, but property investors should try to bear in mind the fact that high-spec property is available for around a fifth of Singaporean market prices.

Dubai’s investment property market is now worth £9.75bn and having increased by 38% so far this year, property could outshine other appealing attributes such as the country’s 5% annual economic growth. But like the 4% fee that’s applied to all property sales, the divide between fund availability and selling price remains significant and the recent spike in activity could diminish sometime soon.

When considering their property investment options, prospective investors should always seek independent financial advice from a proven source, who’s fully capable of answering any questions about overseas property. From guaranteed returns and taxation to mortgage fees and facilities, investors should always consult with an investment expert ahead of any expenditure.

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By David Robinson
Editor
Expats Village

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