Dubai realty ideal for overseas investors
Dubai realty ideal for overseas investors
The phenomenal economic growth of the UAE has generally been attributed to the soaring energy prices the world over. However oil revenues constituted just 35 per cent of the UAE GDP in 2007, the remaining 65 per cent being contributed by the non-oil sector including real estate, construction and financial services. The UAE success story has been molded primarily by Dubai which is now an assured investment hub guaranteeing secure and credible returns.
Upon analyzing the market, we find that the following factors have enhanced the emirate's standing as a safe haven for property investments.
Zero taxation
Dubai has a liberal economic system when compared to established markets like London, New York, Singapore and Tokyo. The emirate's tax free status implies zero stamp duty, income, corporate and capital gains taxes on sales and rentals.
No foreign exchange limits
Dubai has not imposed any foreign exchange controls, trade barriers or quotas, thereby allowing investors 100 per cent repatriation of capital and profit.
Visionary governmental policies
The stupendous growth of Dubai as an economic powerhouse is mainly due to the visionary policies of its government; the emirate's developmental strategies embrace a strictly structured plan. In the year 2000, as outlined in the historic Vision Dubai, the plan was to increase GNP to US$30 billion by 2010. In 2005 that figure was exceeded, with GNP reaching US$37 billion. The plan also included an increase in income per capita to US$23,000 by 2010. In 2005, the average income per capita reached US$31,000. Dubai recently unveiled its Strategic Plan 2015 that is set to continue and foster its economic growth.
Transparent property market
Clear-cut regulations and increasing transparency make Dubai property most attractive to overseas investors. According to a report by Jones Lang LaSalle, Dubai is the most transparent market in the region. The emirate has seen a 12-fold increase in transactions since 2002, when it opened up its property market for foreigners and began improving its legal structure. The Real Estate Regulatory Authority (RERA) and the Escrow Account Law have successfully ended unhealthy speculative practices in the market, lending it credibility and trustworthiness. Dubai's position as the most transparent real estate market of the MENA puts it ahead of other emerging economies such as those of the BRIC Markets (Brazil, Russia, India and China).
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Inexpensive properties; High capital growth
Dubai scores over other metropolises of the world in that its
property offerings are moderately priced. Currently, prices of
apartments in Dubai average US$ 3,980 per square meter. Upon analyzing
the price index of properties in the emirate, we find that the
prevailing figures are much lower than those in established markets,
say, the US and the UK. But Dubai's high capital growth rates which
are sustained by surging demand, range from 20 to 25 per cent;
these are among the highest in the world, and augur high yields for
investors.
Strong rental yields
The demand for housing and commercial units in Dubai is extremely high and their scarcity is driving prices and rents upwards. The rental yields for property in Dubai range from 7 to 10% with residential returns at the lower end and commercial yields at the higher range. They are among the highest in the world, much higher than the UK and the USA. This may seem attractive to investors seeking to rent their properties, long-term or short-term.
Easy availability of mortgages for overseas buyers
It is relatively easy for overseas buyers to secure home mortgages in Dubai. Not much paperwork is involved. Expatriates can avail of finance up to 97% of the value of the property on the local market where a wide range of mortgage schemes are available from government-backed banks and financiers.
Soaring demographics
In Dubai, demand for property is sustained by rising population. Expatriates make up 80 per cent of the emirate's population. In addition, a thriving tourism industry continues to expand at exceptional levels. Over 35 million visitors and 45 million immigrants are expected in Dubai by 2010, all boding well for property investors.
Crime-free environment and top-class infrastructure
Dubai boasts one of the world's lowest crime rates as well as excellent infrastructure. The existing facilities are to be further bolstered by the upcoming Dubai Metro and Al Maktoum International Airport, touted to be the largest airport in the world. Aside from these, the existing road network is receiving a major overhaul.
The emirate is dotted with top grade schools, universities, educational institutions and provides health amenities adhering to international standards. The UAE is a free and cosmopolitan society that allows foreigners cultural and religious freedom. All these have strengthened international perception of Dubai as an attractive hub for property investments.
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New Visa Regulations in the UAE
With effect from July 29, 2008, UAE has implemented new visa rules and fees following the revamping of the structure and charges of entry documents in line with a cabinet decision. 16 different types of visas have been introduced for entry into the UAE.
As per the new policies with regard to issue of entry permits to UAE, the residents can apply for the visa for their spouse or blood relatives. They will need the approval of senior officials for sponsoring other relatives. Only UAE nationals can sponsor friends. The health insurance policy will also become mandatory for visitors and a deposit of AED 1,000 will be collected by the department before issuing visas.
People of all nationalities will be allowed to enter the UAE on a tourist visa. However, the tourist visas can only be applied for by a licensed hotel or a tourism agency. The new UAE visa rules also makes it mandatory for the 34 nationalities to pay AED100 for a 30-day visit visa that earlier got a free visit visa for 60 days upon arrival in the UAE.
As per the rules, people on visit visa will have to go to their home countries for visa exchange. Going to Kish Island, Oman and other neighboring countries for visa change has been stopped.
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| Types of Visa |
Fees |
| Short Entry Visit Visa (1 month) |
AED 500 |
| Long Entry Visit Visa (3 months) |
AED 1,000 |
| Multiple Entry Visa |
AED 2,000 |
| Entry Visa for GCC State Residents |
AED 100 |
| Renewal of GCC State Residents |
AED 500 |
| Entry Visa for GCC State Resident's Companions |
AED 100 |
| Renewal of GCC State Residents Companions' Visa |
AED 200 |
| Tourism Entry Visa |
AED 100 |
| Renewal of Tourism Visa |
AED 500 |
| Entry Visa for Study |
AED 1,000 |
| Renewal of Study Visa |
AED 500 |
| Entry Visa for Expos & Conferences |
AED 100 |
| Mission Entry Visa |
AED 200 |
| Transit Entry Visa |
AED 100 |
| Entry Visa for Medical Treatment |
AED 1,000 |
| Renewal of Medical Treatment Visa |
AED 500 |
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