Forget the bubble: Why now is the time to buy in Dubai
With rents still rising and purchase prices on the decline, buying in Dubai has never made more sense.Peter Iantorno April 14, 2015
Dubai has a lot going for it as a place to live. Location-wise, it could hardly be more central, with both Europe and the East within easy reach. Then there's the beautiful weather - at least until summer comes around, anyway - generally reasonable salaries and, of course, the noticeable lack of income tax.
All this adds up to a pretty desirable destination with a good quality of life on offer, and the prospect of saving a decent chunk of cash. However, almost without fail the main drain on any Dubai resident's bank balance is the extortionate rent for accommodation which, depending on the property size and location, can run well into the hundreds of thousands of dirhams per year.
And although rents aren't ballooning at the levels of recent years, according to real estate portal Bayut.com, in the first quarter of 2015, the average rent for a three-bedroom apartment in Dubai increased by more than five per cent, to AED 215,000 per year. That's an awful lot of money to be throwing away to see no return whatsoever at the end of the year.
In contrast to the steady rental rise, according to the same report, sales prices throughout Dubai actually dropped slightly in the first quarter of 2015, and they are projected to fall even further by as much as 10 per cent as new projects are completed and supply begins to outstrip demand. While buyers are understandably cautious after the Dubai property market bubble burst spectacularly in 2008 during the global financial crisis, with a much better regulated system, fewer pie-in-the-sky off-plan projects and a far more natural up-and-down movement in prices, it appears that this time the city may have learnt its lesson.
One thing that may discourage buyers is an increased transaction tax on property sales, which has doubled since the crash. However, while this may mean a larger initial payout, what the tax does is discourage speculators from buying up masses of property with the sole intention of flipping it to make a quick buck, which would see the infamous bubble that caught out so many begin to form again.
Of course as with any market, property in Dubai will always have an element of uncertainty to it, but after the harsh lessons learned from the last crash, one would certainly hope that even if there is a bubble, it is more likely to deflate slowly, rather than burst in the spectacular fashion of 2008.
While for some people buying simply isn't an option, for those with the capital who plan on staying in Dubai for the long term, now is the time to stop wasting money on rent and instead invest in something that will pay off in the future.