The photogenic Dubai property boom is already in full swing. But, says Alexander Garrett, the emirate’s wealth of bars, shops and entertainment, and its ambitious plans for growth, mean that buying into the epic high-rise fantasy could still be a good idea
If you have never been to Dubai it is tempting to believe that it does not really exist. The more you find out about the place, the less and less likely it seems that it could possibly be rooted in reality.
Three giant artificial palm islands adding hundreds of miles to the country’s coastline? An archipelago the size of Greater London, designed to look like the world itself (where you can buy an island and turn it into whatever your fantasy suggests)? A theme park the size of Singapore, containing the Pyramids, the Taj Mahal, The Great Wall of China and a snowdome? The world’s biggest marina, tallest tower, biggest shopping mall… the list goes on.
Among the most eye-popping facts about Dubai is the sheer volume of property being developed there. According to one estimate, there are some 215 skyscrapers currently under construction in a city of 1.3 million people, with a similar number due to start building in the next two years. The big daddy of them all, the Burj Tower, will have 188 storeys – and rumour has it that if someone announces a taller building in the meantime, they will simply go higher.
Dubai has, without doubt, one of the most booming property markets in the world, illustrated by the plethora of websites selling flats and villas there. But four years after the hype began, is it a sensible place to invest in property? Or will it all end in tears, as so many property bubbles have in the past?
According to Mark Stott, managing director of developer Dubai Select, around 60 to 70 per cent of British people buying in the second-largest of the seven United Arab Emirates are of Asian origin, typically from India, Pakistan or Middle Eastern countries. ‘A lot say that it is a short- to medium-term investment for them, with a view to eventually moving there,’ says Stott.
One of Dubai’s attractions is that it is a crossroads between East and West, with some 1.2 billion people within a two-hour flight. The vision for Dubai is of a place where people come for holidays, shopping, business, sport and fun.
The general consensus is that for short-term speculative investors looking to quickly resell their off-plan property for a hefty profit, the party is over. But Victoria Finch of estate agent Cluttons, which has an office in Dubai, says: ‘People who used to buy in the Mediterranean are now buying in Dubai, and there are also people planning their retirement who want to spend six months in the sun.’
Nevertheless, she says that many potential buyers are put off by the fact that there is a lack of completed properties. Much of what is being offered today won’t be ready for three or four years.
The arguments for buying in Dubai range from the lifestyle – endless sunshine, excellent service, restaurants, shops, hotels, spas – to the investment rationale. Stott argues that with Dubai’s government aiming to boost the population from 1.3 million to 4 million by 2015, and an equally ambitious target to bring in 10 million tourists a year, the demand for apartments to rent will be unquenchable, even with the vast amount in development. He adds: ‘I genuinely believe that property in Dubai is underpriced too. Salaries of professionals there are comparable to those in the UK, with the bonus of being tax-free. But an apartment at Salford Quays in Manchester would cost you twice as much as a comparable property at Dubai Marina, and if you were in your twenties, starting out, I know where I’d rather be.’
Faced with the vast array of off-plan property available in Dubai, the question is how to choose. Stott believes Dubai Marina, where his company has been involved in developing two buildings, The Torch and The Point, is a sound choice, because it is next door to Media City, where Microsoft, Cisco, Reuters and CNN are all installed, and there’s a choice of letting to businesses or tourists. ‘Our investors want to know their property is tied up for the next 12 months,’ he says. ‘The holiday lettings market can be a nightmare to manage.’
Neil MacKenzie of property investment company Oyster International is promoting properties at a striking German-engineered building called The Cube in Sports City. ‘Some buyers think it is a good investment because of the management structure; others think it will be a good investment because Dubai is set to host major sporting events in 10 years or so,’ he says. His clients include Asian doctors, dentists and other professionals with an eye on moving to Dubai. ‘In 10 years’ time, there simply won’t be another opportunity to buy a property like that, right next to the stadia,’ he says.
The zones where non-residents can buy freehold property have been clearly laid out; MacKenzie says it’s also advisable to buy from one of the big four developers: Nakheel, Emaar, Dubai Properties and Damac.
The big money in Dubai has so far gravitated towards the Burj Tower and the Palm Islands, and the World is now ready to compete. The first of the islands to release residential property is called Perseus, and notionally makes up part of ‘Russia’ on the map. Cluttons is selling villas there starting at $2.9m, with one-bedroom flats starting at $557,000.
Anyone browsing for property in Dubai will find that the computer-generated images of islands, skyscrapers and attractions on an epic scale leave you feeling like you are in one of those massive multi-player online computer games in which there is no limit to the imagination.
It certainly requires an act of faith to believe that everything will happen just as Dubai’s effective ruler, Sheikh Mohammed bin Rashid al-Maktoum, says it will. But then a lot of people have come to believe that anything is possible in Dubai. As Victoria Finch puts it: ‘The government will simply make it work.’
Source: The Observer
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