J
joseph0086
New Member
Dear all, I am 28, a man living in Dubai with decent salary. I am a man who is always looking for good return on my capitals by any means.
I discover that Dubai's property market has a huge potential. The rental return (after deducting all the annual expenses like maintenance and service charges of the building) is about 7%. You can't find this return in other big cities like NY, London or Hong Kong. The interests rate is decreasing further and further, the mortgage I got is about 4.5% as the mortgage rate. That's how I see the opportunity as an investor.
Those who are skeptical of my remarks may still remember the property crash in Dubai in 2009. Yes, it happened, and yes, many people lost their savings in their lives. But let's be honest, they were greedy and made risky bets, now they are responsible for the decisions they made at that time. They paid 10% downpayment and wished that they could flip the property within one day to make a 10% profit, it's not the way to invest in properties. There are some others who just followed the hypes in the media and bought in something that was just beginning to be built. Now some of the buildings are left in the desert and will never finish the construction.
For those who bought in early before 2009 for those completed projects, I am sure they are still making a decent profit on the property price on top of the big rental yield.
In Dubai, people keep claiming that it's over-supply and it means that the property price can not easily go up. It's not exactly true. I came here to work 2 years ago, at that time I could see that the economy was sluggish. But after 2 years, i could see the huge difference. There are so many tourists all over the places. And along the main highway (Sheikh Zayed Road),all apartments and hotels are full of residents and tourists and businessmen. The economy is back in Dubai, but this time it is not based on the speculation in real estate, instead, it is based on the strong infrastructure and as a transit and tourist hub for people all over the world.
The influx of people (quite a few are from the arab countries affected by the arab spring) drives the rent up in prime locations, and drives up the occupancy rate in secondary locations. All of these are good news for property investors.
There is no way the oil price will go down in the next 5-7 years. With this factor in your mind, and also Dubai will most likely host the World Expo 2020, I don't see how the economy will go bust again here, from now to 2020..
In terms of calculation, in Dubai real estate, buyer needs to pay 2% agent fees, 2% fees to the government. There is no tax at all on rents or capital gains. It means that your only annual expense is the service charge and maintainence charge of the building. To the benefits of the landlords, in Dubai, most tenants pay the rents in a number of cheques from 1 to 4 ahead of time when they sign contracts.. Of course for us it is much better than monthly payment. As I said earlier the bank mortgage is around 4.5%-5%. Most bank mortgage are linked to the EIBOR rate (kind of like LIBOR). EIBOR keeps dropping in the last 2 years, as the banks are strong fincanically and the economy outlook is brilliant, the EIBOR will keep dropping.
One more thing to add: the fundamental dynamics in the Dubai market is not the same as other big cities. Most buyers here are international investors. Whenever there is a political turmoil elsewhere like Egypt, Syria, Afghanistan, Pakistan or Russia, rich people will rush in and buy properties in Cash. With the ongoing political problems in this region, I will see many more international investors coming here in the coming years.
I discover that Dubai's property market has a huge potential. The rental return (after deducting all the annual expenses like maintenance and service charges of the building) is about 7%. You can't find this return in other big cities like NY, London or Hong Kong. The interests rate is decreasing further and further, the mortgage I got is about 4.5% as the mortgage rate. That's how I see the opportunity as an investor.
Those who are skeptical of my remarks may still remember the property crash in Dubai in 2009. Yes, it happened, and yes, many people lost their savings in their lives. But let's be honest, they were greedy and made risky bets, now they are responsible for the decisions they made at that time. They paid 10% downpayment and wished that they could flip the property within one day to make a 10% profit, it's not the way to invest in properties. There are some others who just followed the hypes in the media and bought in something that was just beginning to be built. Now some of the buildings are left in the desert and will never finish the construction.
For those who bought in early before 2009 for those completed projects, I am sure they are still making a decent profit on the property price on top of the big rental yield.
In Dubai, people keep claiming that it's over-supply and it means that the property price can not easily go up. It's not exactly true. I came here to work 2 years ago, at that time I could see that the economy was sluggish. But after 2 years, i could see the huge difference. There are so many tourists all over the places. And along the main highway (Sheikh Zayed Road),all apartments and hotels are full of residents and tourists and businessmen. The economy is back in Dubai, but this time it is not based on the speculation in real estate, instead, it is based on the strong infrastructure and as a transit and tourist hub for people all over the world.
The influx of people (quite a few are from the arab countries affected by the arab spring) drives the rent up in prime locations, and drives up the occupancy rate in secondary locations. All of these are good news for property investors.
There is no way the oil price will go down in the next 5-7 years. With this factor in your mind, and also Dubai will most likely host the World Expo 2020, I don't see how the economy will go bust again here, from now to 2020..
In terms of calculation, in Dubai real estate, buyer needs to pay 2% agent fees, 2% fees to the government. There is no tax at all on rents or capital gains. It means that your only annual expense is the service charge and maintainence charge of the building. To the benefits of the landlords, in Dubai, most tenants pay the rents in a number of cheques from 1 to 4 ahead of time when they sign contracts.. Of course for us it is much better than monthly payment. As I said earlier the bank mortgage is around 4.5%-5%. Most bank mortgage are linked to the EIBOR rate (kind of like LIBOR). EIBOR keeps dropping in the last 2 years, as the banks are strong fincanically and the economy outlook is brilliant, the EIBOR will keep dropping.
One more thing to add: the fundamental dynamics in the Dubai market is not the same as other big cities. Most buyers here are international investors. Whenever there is a political turmoil elsewhere like Egypt, Syria, Afghanistan, Pakistan or Russia, rich people will rush in and buy properties in Cash. With the ongoing political problems in this region, I will see many more international investors coming here in the coming years.
