Dubai’s property boom is not going to slow down anytime soon, real estate experts have said.
A rising population, minimal taxes and the global economic climate are chief among the reasons for continued optimism when it comes to the emirate’s property sector.
Another major factor is that the price of property is still low compared to other major cities such as London and Hong Kong, despite the fact that costs continue to rise.
The rapid growth of the Dubai property sector had led many to speculate if the housing bubble would burst.
“Dubai's property boom is not due to slow down anytime soon,” Lewis Allsopp, chief executive of real estate firm Allsopp & Allsopp told The National.
“This is due to Dubai’s rapid population growth, global economic factors and limited taxation.
“Income tax is non-existent and corporate tax has been only introduced this month, being one of the lowest in the world at only 9 per cent.”
'Surging prices still comparatively low'
The value of real estate transactions in Dubai grew by 87 per cent on an annual basis in May, said a report by real estate listings website Property Finder.
The aggregate value of deals in the emirate last month was Dh34 billion ($9.3 billion).
Part of the emirate’s appeal is how it compares to other global hubs for property prices, he added.
“The price to get a two-bedroom in a central location in London is around Dh10 million,” said Mr Allsopp.
“You can buy a two-bedroom in Business Bay for Dh1.5m and in prime areas like Downtown for around Dh2.5m and that is without considering the actual space, which goes without saying is way more generous here in Dubai.”
While it might seem obvious that a market as developed as London's would demand higher prices on premium properties, the comparison with Dubai was still a fair one, insisted Mr Allsopp.
"Dubai continues to establish itself as an international destination and a comparison with prices in other global centres like London is timely as many young professionals, families and businesses are moving themselves to Dubai," he said.
Dubai’s population surpassed the 3.5 million mark in April, powered by a rise in migration.
The emirate’s government plans to ensure the population rate continues to soar, with plans in place for 5.8 million to call Dubai home by 2040, necessitating a major expansion.
“The challenge is, the launches that are happening this year will not be complete for three years, but the influx of people coming into Dubai is happening at the present time,” said Mr Allsopp.
In recent years a trend has emerged with many Dubai residents looking to the suburbs for somewhere to call home, due to rising prices in more central areas.
This has led to many moving to areas such as Arabian Ranches 2, Jumeirah Village Circle, Town Square and Mira.
The shortage of properties currently available has also led to a surge of interest in off-plan properties, another expert said.
“The (current) supply of housing falls short of meeting demand, which explains the surge in new off-plan property launches, including notable projects like Palm Jebel Ali and Expo City,” said Matthew Gregory, branch director at Betterhomes.
“Developers are keenly aware of the opportunities presented by this growth and are striving to offer competitively priced properties.”
Even with a new supply of properties, the market is unlikely to experience a crash, he added.
“However, as the population continues to expand and the housing supply becomes more abundant, we can expect prices to stabilise rather than experience a sudden crash,” said Mr Gregory.
In fact, he said prices could continue to rise with an influx from one market in particular.
“As China resumes international travel, there is the potential for them to exert their investment power, resulting in another wave of investments pouring into the city and further fuelling the market,” said Mr Gregory.
He also echoed sentiments around the comparatively cheap property available in Dubai when looking at other markets.
“Dubai’s prime real estates are seven times lower than those in Hong Kong and five and a half times lower than in London,” said Mr Gregory.
“Dubai offers one of the most favourable investment yields globally.
“These price differentials between it and the other two cities will continue to draw the attention of investors, individuals and families seeking a distinctive lifestyle that Dubai has to offer.”
The overall quality of life for residents of Dubai remains a key factor for the emirate’s continued popularity, said another real estate expert.
The UAE was named as the sixth-best country for expatriates to live and work in by a report released last year by global network InterNations – moving up 12 places from the previous year.
“Clients don’t just look at the price per square foot when making a decision – aspects such as safety, leadership, tax benefits and the general way of life can make a city feel ‘cheap’ or ‘expensive’,” said Charlie Bannan, sales director with Haus & Haus real estate.
“Now, more than ever, I speak with people from the UK who are taking the leap and relocating themselves and their families for a better lifestyle.”