Dubai investment

Am thinking/toying with the idea of investing in property in Dubai in particular Sports City. Have been looking at a project called Diamond. (Studio appartment circa 605 sq ft costing 160k. Has anyone bought in Dubai that could advise me on this type of investment.(not necessarly Diamond) have been to Dubai which is really nice and there seems to be no end to the wealth overthere. Only received advise from EA'S but they promise the sun moon and stars. Am l correct and saying that if one bought in Dubai and sold after 5 years they would only pay CGT in Ireland. l'm sure this has been discussed before so if someone could point me to the relevant threads.


Thank you
Macd

One or two things to remember about Dubai..

No proper conveyancing system, essentially you own the place at the behest of the developer, who in turn is at the mercy of the local sheik. In Ireland we would describe the title as severely flawed.

Tourism is growing in Dubai, but not apartment based -- almost entirely hotel based, and the ruling families have invested and are investing heavily in hotels. No real market for holiday lets although some limited market for low cost property for workers in services sector.

This is a market that is driven in Ireland by agencies with huge commissions, and relies on one-off buyers rather than institutional or well-advised buying groups. Only buy there if you intend to spend lots of time there, but forget it as investment.

Thanks for your reply, have searched some threads on this topic and quite frankly it has changed my mind.

Thanks again.

While we're on the topic of Dubai, can I ask what the point of it is? It sounds like a concrete jungle in a dodgy part of the world located in a desert. It's got sun, along with half the rest of the world. Why would you want to holiday/live there? This is a serious question.

it is (was) is luxury destination but it has become very over-developed.

listen to auto320 - it is indeed a destination for hotel holidays. any time that i have been there it has always been difficult to get bookings in the restaurants in your own hotel whenever it is busy - what is an appartement dweller supposed to do? there are no green spaces so everyone hangs around the hotel and/or the malls.

auto320 said:

One or two things to remember about Dubai..

No proper conveyancing system, essentially you own the place at the behest of the developer, who in turn is at the mercy of the local sheik. In Ireland we would describe the title as severely flawed.

Tourism is growing in Dubai, but not apartment based -- almost entirely hotel based, and the ruling families have invested and are investing heavily in hotels. No real market for holiday lets although some limited market for low cost property for workers in services sector.

This is a market that is driven in Ireland by agencies with huge commissions, and relies on one-off buyers rather than institutional or well-advised buying groups. Only buy there if you intend to spend lots of time there, but forget it as investment.

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Well Said Auto320 - you hit the nail on the head perfectly

I worked for a year in Dubai in the late nineties and I've been back a few times since. Its a good destination for hotel based holidays (if you can afford it - its not cheap) and a good place to do trade based business as its the financial centre of the middle east. But I would have real problems investing in residential property there. Firstly because, lets call a spade a spade - its not a democracy . The most charitable description you could give it is a benevolent absolutist monarchy. Everything is owned by the Al- Maktoum family - there is no such thing as private property there when it really comes down to it. Rough rule of thumb on investing is that you stand a better chance if there is rule of law, the right to private property and strong legal institutions - not for when things are on the up - but for when things are going down - it might be news to many of the newly empowered investing classes in Ireland - but values do fluctuate.

My second problem with Dubai is simply the region it is in . Dubai is great at covering everything in a shiny patina of modernity and it looks fantastic, But once you delve beneath the surface , particularly if you go into the well hidden quarters of the indentured class who make everything work in the place - the thousands and thousands of emigrants from the rest of the Arab world and Indian subcontinent and look at sometimes quite appalling conditions in which they live - you get a completely different vibe of the place - lets just say if you get a chance - rent out the film "Syriana" - leaving aside the main plot - the location could be Dubai, Abu Dhabi or any of the rest of those petro emirates along the Persian gulf. My Gut feeling is that there is going to be major social instability in that region from combination of exploding populations and the massive concentration of wealth in the hands of a corrupt few in the region over the coming decades. The financial centre of the Middle East used to be Beirut - in this part of the World - things can change very fast.

Leave aside the superrich who have bought property in the Area - they are not investing in little more than summer houses and as with the rich everywhere since the beginning of time - they can up sticks and go at a moments notice or well afford to take a hit if they dont - the small investor from Ireland armed with just equity release from their home here does not have that luxury.

The absence of a re-sale market for residential property ought to be a major consideration too.....

It boils down to this, potential investors need to think with their heads and not be seduced by glossy brochures and computer generated models of beautiful people in beautiful surroundings. You need to invest, if that is what you want to do, in real markets for real people with a real exit strategy. For apartment buying, this means sticking to cities where there is a real local market, and buying at those prices. Go to London, Paris, Budapest, Frankfurt, Rome, or any major city of quality and buy the most you can afford in the best area possible. Rent it out to local tenants and be realistic; it will need management, occasional repairs, and will have a certain amount of downtime. If you have six months without a tenant, stop crying about it and see what needs doing to get one -- decorate the place or drop the rent usually. If you want to buy a holiday home that you will be able to access and use easily, go to the south of Spain or coastal France, and buy in good areas where you will be able to resell easily and get occasional rentals if that's what you want.
Stay away from the likes of Dubai, Bulgaria, Morocco, Capetown, most of Florida and any one of a dozen markets that don't meet the above criteria. It really is that simple, loads of people do it and make a few bob. Loads of others don't, and live to regret it. One thing is sure, the guy that sold the pup to you wou't be at all interested in your troubles when the do-do hits the fan

Auto320 and Edo have made some excellant posts.

Perhaps a moderator should mark this thread as a key post/sticky?

Macd said:

Am thinking/toying with the idea of investing in property in Dubai in particular Sports City. Have been looking at a project called Diamond. (Studio appartment circa 605 sq ft costing 160k. Has anyone bought in Dubai that could advise me on this type of investment.(not necessarly Diamond) have been to Dubai which is really nice and there seems to be no end to the wealth overthere. Only received advise from EA'S but they promise the sun moon and stars. Am l correct and saying that if one bought in Dubai and sold after 5 years they would only pay CGT in Ireland. l'm sure this has been discussed before so if someone could point me to the relevant threads.


Thank you
Macd

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Dubai is a very complex market and there is more potential to loose money than any where in the world at present in my opinion

I agree completely.

Won't stop loads of irish ramming their heads into the sand there though.

We own property in Dubai and just about to by another. Granted, we live there for most of the year and know the market quite well. As far as investment is concerned, location will become more and more important as there are so many huge developments coming on stream in the coming months. Because the hotels are so oversubscribed, short term rentals are buoyant for example to let a two bed apart over xmas clears nearly 1200 euro per week. Letting out the same apartment on a long term basis nets 3000 per month.

Yes, Dubai is a bit of a construction site at the moment but dynamic, fun, sunny and a great place for a holiday.

Hi

I have bought a studio in the spain block in Internation city it is due for completion in January, hoping to rent, it has anyone any idea what kind of a rental market in in this area.

Good as far as I know Focus, you should have no problem letting it as long as all the facilities are in place. Studios and one bedrooms seem to be sought after in all areas. Better Homes are one of the better letting agents, so you will get an idea from them.

Focus, have a quick look at the classifieds in Gulfnews.com, it may give you an idea

auto320 said:

I agree completely.

Won't stop loads of irish ramming their heads into the sand there though.

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I guess!

Does anyone know of any Condo Hotel type developments avaiable to buy into in Dubai at present?

we were going to invest in a property in dubai but once we had done some more in depth research changed our minds.
as pretty much everyone buying there is buying brand new and the development boom seems to be in its fairly early stages we thought would be quite hard to sell in the future as so much new builds for sale.
also the payment scheme most places were wanting was a bit of a pain, 15% now, 10% in a few months time, then another 15% etc. Also we were told that local banks would only give non residents a 50% mortgage so going down that route meant having to have about 60k lying about which, much and all as i wish i had!, we just don't!
the final thing that changed our minds was that at present aer lingus are flying direct out there. theres no guarantees that this will continue for years to come and without direct flights would the demand for people going there be as high? chances are the flights will continue but when it all came down to it, we just weren't willing to take the risk. too many reports and stories and advice from people saying no!

Aer Lingus have been disappointed with the performance of the Dubai route, no guarantee that it wil last.

The other big issue apart from rentals or the lack thereof is the combination of shaky title and the volatility of that region. In my view it makes the location no-no for any small investor.

One poster knows the area well, has lived there apparently; someone like that can probably do ok in the short term with good local knowledge. However, as with many ,markets like this, if you really want a property there you are better waiting until a lot of this stuff comes back on the market in a few years when the small players realise that the rentals just aren't there. Prices should be better for buyers when the supply/demand curve takes over; in addition, at that time the thick commssion layer that presently adds quite a bit to Dubai property will have moved on to "the next big thing".

According to this article in the economist the government has capped rent increases at 7% for 2007, with no increase allowed if they were increased in 2006. An example of the type of interventions foreign markets are subject to that the average Irish landlord might not expect.

I have been living in the UAE for more than 15 years and I have not bought any property in Dubai. My main reasons for not buying are titles which are probably not worth the paper they are written on, no resale market, unscrupulous agents and develepors, bad inferstructure.
To live in Dubai you need a visa (which you have to pay for) this visa can be cancelled at any time regardless of whether you own property or not.If you have a visa and you do not visit the country every 6 months your visa is automatically cancelled. Local people are given land and interest free loans to build houses for themselves and their family so they will never buy one of these appartments or villas. During the next 3 years 280000 new appartments/villas will come on the market in Dubai with a similar number in Abu Dhabi, who is going to buy these? A colleague has had his villa on sale for 2 months with all the good agents and he has not had a single offer yet. There are many sharks in Dubai but very few of them live in the water.Traffic and driving standards in Dubai are very bad, during the past year there were more than 200000 accidents on the roads. The cost of basic food stuff has gone up by 28% during the past 4 months. The UAE is a very stable country but it is in the most volitile region in the world, Iran is only a short boat ride across the Gulf.