investing in Dubai

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denise1234

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We recently went to a Dubai property expo and were impressed with the properties on offer and rental potential etc. However, since the expo we've mentioned to a few people we were considering investing there and have had very mixed opinions! Has anyone bought in Dubai and how have you found it? Is it as straightforward as the property company made out, keep thinking there has to be a catch?
 
they told us that there is guaranteed rental for either 3, 5 or 9 years depending on length of contract signed to rent it out. all companies who take property to rent will furnish it and pay regardless of whether it is occupied or not. have checked this out with a friend who worked over there and she seemed to think was above board
 
Will you be offering the same rental guarantee to whoever you sell the property to in 3, 5 or 9 years?
 
Just to point out some risks with 'guaranteed rent'. Guarantees are sometimes not worth the paper they are written on. You have to ask yourself who is guaranteeing this rent and where they are getting the money from? If I entered into an agreement with someone to get money (in your case the rent), I would need to be very sure of the bona fide and financial backing of that person. So, a lot of research is advised. What do you know about the people agreeing to pay this rent for you?

The second question is where on earth are they getting the money from to pay this 'guaranteed rent'. The answer usually is that they inflate the selling price and pay it out of that. So instead of selling the apartment for, say, €200k, they sell it for €225k and use the €25k to 'guarantee' the rent. Simple! Problem is, of course, that when you come to sell the apartment, it is only worth €200k. So the only person paying that rent is you!

Another risk is that the company 'guaranteeing' the rent goes bust. If they do, or if one day they stop answering your calls, say goodbye to your 'guarantee'.

Those are the risks. There are, no doubt, benefits to investing abroad. But before you make a decision, be aware of all the pitfalls, as well as the promises of fortune. There are many threads on askaboutmoney.com about 'guaranteed rental' schemes, so you would be well advised reading up on them.
 
I think Howitzers question is a good one.

Say you are buying a property now for, say, €250k and that property gives 'guaranteed rent'.

If you decide to sell the property and you are not offering guaranteed rent to the person who buys it from you (which clearly you won't be!), how much do you think they will buy the property off you for?

If a property with guaranteed rent is worth €250k, then the same property without guaranteed rent is clearly worth a lot less than €250k.

That's another way of showing you that you are paying an inflated price for a property with 'guaranteed' rent.
 
We've gotten a friend of ours who is working out there at present to send us property pages of papers to compare prices buying direct and then renting seperately and doing whole lot with property company. prices with latter seem bit higher so think you've answered why, cheers! knew it was all too good to be true!
 
in addition you ought to bear in mind the huge numbers of appartments that are being built in Dubai at the moment. I have been there a few times and literally dozens of new residential blocks appear every time I visit. you need to check the resale market as i have heard that it is still in the developmental stage as everyone buys new.
 
denise1234 said:
We recently went to a Dubai property expo and were impressed with the properties on offer and rental potential etc. However, since the expo we've mentioned to a few people we were considering investing there and have had very mixed opinions! Has anyone bought in Dubai and how have you found it? Is it as straightforward as the property company made out, keep thinking there has to be a catch?
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Dubai in my opinion is the most complex market to invest in at present. There is the potential of loosing a lot of money. You will more than likely buy offf plan. Make sure you use a Dubai only agent in my opinion. The pace at which the market is changing over there is frightening, which means if who you buy from doesnt know whats coming next could be badnews for you. Ensure that finance through a major bank is avaiable on the developemtn you buy whether you need it or not. This ensures that other buyer in the developer can use this. HSBC, Barclays Int etc. Dont go for developer finance schemes, no matter how tempting they look. Your property will take 18 months to 2 years to build, the likes of HSBC will sustain this test of time, the financing from developers may not. The main developers over there are Nakheel, Dubai Properties and Emaar.
 
Be very,very careful buying in Dubai. Despite what people tell you there is a real question over title. Also whilst there are some fabulous developments such as the palms etc. for every gem there are ten badly built and badly located dogs.

Be especially careful of anything with the word "view" in its title e.g. palm view which by definition is not on the palm but just milking its name.
 
Also remember any capital gain is taxable in ireland @ 20 %, if you flip the property which seems to happen a lot in Dubai, this is also considered a capital gain and tax is due on this in ireland. Also any profit from rental income is taxable in ireland
See [broken link removed]in general and "Example rental income account" and "How foreign rents are taxed" in particular

You also need to be aware of inheritance rights, title, currency fluctions, how volitale the area is etc.
 
HighFlier said:
Be very,very careful buying in Dubai. Despite what people tell you there is a real question over title.
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It is only in past 3/4 years that foreigners can actually purchase property in dubai.

Up until very very recentry no-one could buy Freehold property in dubai.
In fact, this is STILL the case, but Sheik Mohammad is supposed to pass this into law shortly. I know this was not the case 3 months ago.

I did a lot of research on Dubai about 2 years ago; and ended up in Budapest (currently on 6.5% yield in district 6). company I worked for had office in dubai, and was there a bit. The changes are so phenomenal in the past 5 years, its hard to comprehend.
Dubai now has the very worst traffic on Earth. it defies belief. Rush-hour on the M50 doesn't even come close. I once gave 1 hr 15min going a little over 1 mile. Theres another thing; the heat in Dubai is as incredible as it is constant. 40+. I'm not a fan of the heat, so it would murder me!!
(interesting side-track: some new cars in Dubai can be started remotely, and aircon switched on, so its cooler for your drive to work :) Burning your hands on the doorhandles is a thing of the past ;) )

There are apartments being built everywhere (at the time I was interest in the Jumeriah Lakes development), but, to be fair, there is a reasonable rental market, as the population of Dubai is very much an ex-pat one.
I remember you got a residency visa (!) with every apartment sold :eek:)

hard to know if there is still value in it. Notice how the main stream property supplements don't mention Dubai and hungary as much as before, if at all. a sign?

I know that had I bought in dubai at the time, it would be worth far more now that the place I have bought, but i still feel happier that I have a steadier investment.

EDIT: just remembered, the news at te time was to avoid a place called International City. Massive development of themed towns (not to be confused with the Palm, Palm2 or The World)
 
EDIT: just remembered, the news at te time was to avoid a place called International City. Massive development of themed towns (not to be confused with the Palm, Palm2 or The World)[/quote]

Just wondering did the news give reason for not going near international city as this seems to be the place all developers are selling
 
Don't forget the super-exploitation of foreign workers on these work sites.
I saw this for myself on a behind the scenes side trip I made out to a workers compound whilst there last November.
 
denise1234 said:
Just wondering did the news give reason for not going near international city as this seems to be the place all developers are selling
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very 'cheap' seemingly, and a MASSIVE development, thousands of apartments. The guys i worked with (including my boss at time) advised to stay far far away from that development.
 
paddyd said:
very 'cheap' seemingly, and a MASSIVE development, thousands of apartments. The guys i worked with (including my boss at time) advised to stay far far away from that development.
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Cheers for the advice. Think we'll invest in somewhere a little closer to home. Dubai seems like too much of a grey area for my liking. Too much money to be taking a risk on something not that clear and ambigious.
 
don't just think property! there is a world of investment options out there. buying a single property is a relatively risky undertaking despite all the positive press that property investment seems to generate (this website being an exception). how do you know that property is the most suitable investment option available to you at this time?
 
denise1234 said:
they told us that there is guaranteed rental for either 3, 5 or 9 years depending on length of contract signed to rent it out. all companies who take property to rent will furnish it and pay regardless of whether it is occupied or not. have checked this out with a friend who worked over there and she seemed to think was above board
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You have answered your own question here -- i.e. they will pay you regardless of whether it is rented out or not! In other words, there is no rental contract in place with a holiday company or other agency.

Dubai has more questions than answers as many of the contributors have pointed out, and the nature of the "title" of properties there would be described in Europe as unsatisfactory. In other words, if a lawyer in Europe was acting for you in a similar situation in Europe he or she would advise you that the title to the property was unsafe.

The other issue in Dubai, apart from its location in the middle of the most unsettled place on the planet, is that tourism is almost all hotel based; there is very little holiday rental of apartments -- ok there is some, but not a significant amount. The future of Dubai tourism is hotels, and these are firmly in the hands of the sheiks.

However like many other iffy markets, if you want to holiday several times a year in Dubai in your own place, then go ahead and buy. Just ask the seller to give you a price without the "guaranteed rental".
 
Has anyone got any experience or know anyone buying in Dubai Sports City (DSC)? I'm very close to signing up for a studio in the 'The Cube' development in 'the heart of DSC'. As for many other people this is my first venture into the overseas property market having all but missed out on the UK boom. My problem with it all is that it seems too good to be true and we all know how that saying goes. I've opted for a local agent specialising in overseas property.

I've taken the predicted rental income of >10% with a pinch of salt but still can't help thinking of it as a genuine investment. The scheme runs on a hotel-style letting. You get 30 days a year for your own personal use and the company essentially lets out the apartment on your behalf for 20 years (which is transferable with sale) with you receiving revenue as a proportion of the pooled income depending on your 'initial stake' in the whole building.

With the number of global sporting events that Dubai is hoping to host come 2010 (the cube won't be finished until 2008) there seems to be great potential here........i guess I'm just a little scared!!!
It looks great though and who wouldn't want to use that swimming pool!!!
 
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