Buying Property in the Emirates
In May 2002 a decision was made that began a property revolution in Dubai. Previously only UAE nationals could own roperty, but in May 2002 the Dubai Crown Prince General Sheikh Mohammed bin Rashid Al Maktoum issued a decree allowing foreigners to buy property freehold.
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Since this time property prices have risen by nearly 20% per annum as foreigners flock to snap up luxury properties in the Emirates. However while property seems to be one of the most intelligent investments that can be made, it is also perhaps the toughest. The decision to buy property should be backed by extensive homework. A buyer should consider the quality of the local area, distance of local amenities; state of public transport and most importantly the neighbourhood rental prices.
It is essential to study in detail the property market of the particular emirate that the investment might be made in. Take for example the emirate of Dubai. Dubai has some of the most sought after property in the world but a 4 bedroom house in the affluent area of the Arabian Ranches will cost around GBP 622,300. This is in contrast to the 862,000 one might expect to pay for a similarly sized property in the St John’s wood area of London. Despite the discrepancies in house prices mortgage rates are very similar. The fixed rate of both the Halifax bank and Amlak Finance is around 6.50% meaning that the cost of borrowing money to buy houses in the UEA would be the same as in Britain.
Most buyers of foreign property take advantage of the rental market to make short term income. A recent study by a Middle East finance and economy information provider compared a typical South-West England town like Salisbury to the housing market in Dubai. They concluded that in Salisbury you can rent a substantial family home for $2,900 a month. A similar five-bedroom villa in Dubai might be $3,100 per month. But the same comparison on house prices found that in Dubai the villa in question would cost $550,000 while in Salisbury the rental house in question was on the market last summer for $1.4 million. Consequently the study shows that a rental yield of 6.8% is available compared to only 2.5% in the UK.
In Dubai, therefore, houses are available cheaper than in the UK with a similar rate of interest on any mortgage while the revenue available from renting any property is far greater than could be expected in the UK. Dubai and the other emirates are also able to offer the investor considerably more sunshine in which to enjoy their new home.Buying property anywhere in the world deserves a lot of care and it is important to be meticulous in preparation. Budgets need to be considered, with solicitors and agents fees taken into account. The areas around the any property need to be examined before an offer is made while the availability of schools and hospitals may also be important depending on the buyer’s circumstances.