Investing in Skyward Bound Dubai
With an auspicious location at the nexus of the emerging economies of West Asia, Africa and the Middle East, the metropolis of Dubai is young, dynamic, and highly cosmopolitan – foreign residents comprise 87% of its population. The city also happens to be a magnet for international home buyers with stunning luxury developments and favorable policies towards overseas investors.
City of Wealth and Charm
Unique in the Gulf Coast region for its highly developed economy that does not depend on oil, Dubai has financial services, shipping and property development as core industries. Thousands of foreign companies enjoy favorable tax policies in designated free zones. Elite entrepreneurs building global businesses find the city to be ideally located, as Mumbai, Istanbul, Nairobi and Geneva are respectively only 3, 4, 5 and 6.5 hours away by air.
Architecturally stunning real estate developments must be counted among the highlights of living in Dubai. The magnificent Burj Kalifa, the tallest building in the world, is of course one example, and others include:
- Meydan One, which will house more than 78,300 residents when completed around 2020 and includes what will be the world’s tallest residential tower, the Dubai One.
- Palm Island, a vast palm-shaped resort built on reclaimed land extending 5 kilometers into the sea.
- Mall of the World, to be largest mall in world with 743,224 sqm of floor space.
Excitement and Amenities
Outdoor lifestyle activities include dessert safaris, yachting, watersports and relaxing on the luxurious Jumeriah Beach. The city is also home to vibrant art, dining and nightlife scenes, as well as a cornucopia of mega-malls and boutique outlets where shoppers enjoy tax-free consumption.
Expats with young children have many options for international schools, and a host of reputable higher learning institutions include American University in Dubai, Canadian University of Dubai, Al Ghurair University, University of Wollongong in Dubai and British University in Dubai.
Strong Economic Links to China
Chinese traders first set up businesses in Dubai in the 1990s, and since then the Chinese population in the city has grown dramatically and stands now at roughly 270,000 (Jan 2016). The biggest center of Chinese business activity is the 1.2 kilometer-long Dragon Mart building, which serves as a gateway for Chinese products heading towards Middle Eastern and North African markets. The adjacent International City residences likely holds the greatest single concentration of Chinese households in the city.
In recent years, Chinese tourists visiting Dubai have also increased dramatically, reaching a total of 344,00 in 2014, a 25% increase over 2013. They are attracted to the city’s fabulous architecture, luxurious hotels, tax-free shopping and cosmopolitan atmosphere.
Currently, more than 3,000 Chinese companies are operating in Dubai, and two-way trade between China and Dubai has reached $46.7 billion according to Xinhua. Six Chinese cities are connected to Dubai with direct flights to Beijing, Guangzhou, Kunming, Shanghai, Urumqi, as well as Hong Kong.
Dubai has been undergoing a property construction boom since the government first began allowing foreigners to buy property in 2002, and Deira, the new city center east of Dubai Creek where most development is taking place, is where most foreigners buy homes. Many are attracted by the government’s zero-tax policy that applies to both rental income and capital gains, and the availability of freehold properties is another draw.
Demand for Dubai property is affected strongly by the health of both the local and global economies, but savvy investors will not have difficulty making profits by timing their purchases correctly. As of Q3 2015, home prices in Dubai have fallen 8% y-o-y on average, but some observers claim the resulting higher yields are already generating a pick up in buying interest.
Economic activity associated with preparation for the World Expo 2020 is predicted to have strong positive impact on the housing market, and indeed it is likely that the event is already boosting demand to significant degree.