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Dubai – Homepage

General country information

dubai2Dubai is the second largest of the seven Arab emirates that comprise the United Arab Emirates – the others are Abu Dhabi, the capital city, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah.

Facing the Persian Gulf, the city of Dubai straddles the Dubai Creek, a natural inlet which divides the city into the Deira and Bur Dubai districts.

Oil was discovered in Dubai some 40 years ago. But it has not relied on this alone and has reinvested into creating a modern infrastructure and amenities and developing as a strong trading centre and tourist resort.

The UAE as a whole has an open economy with high income per head and a sizable annual trade surplus. It has a sub-tropical, arid climate with average temperatures ranging from about 24 degrees in January to 41 degrees in July.

An explosion of exotic property developments in Dubai was signalled by a 2002 Royal decree permitting foreigners to own property. Previously only UAE nationals were allowed the privilege. However, the problem remained that there was no federal law recognising freehold tenure.

Investment property – DubaiProperty laws are being developed but currently there remains a fuzziness about the value of Dubai freeholds (which come with a residency permit) whose value relies partly on the international trading credentials and good name of the country rather than enforceable law.

Even so the Dubai building boom has attracted investors from across the world, partly due to its tax incentives but also because of its climate and luxury lifestyle.

After three years of house price falls, Dubai’s housing market is now recovering fast. The all-residential property price index (RPPI) surged by a record 18.89% (18.26% in real terms) during the year to November 2012. Demand is rising strongly. Property transactions in the emirate rose by 21% to AED63 billion (US$17.15 billion) in the first half of 2012 frDubaiom H2 2011, based on figures from the Dubai Land Department. Foreign property transactions rose by 36% to AED28.3 billion (US$7.7 billion) in H1 2012 from the same period last year.

To prevent speculations and another property bubble from emerging, the central bank recently issued circulars to banks cutting the maximum loan-to-value (LTV) ratio for Emiratis from 80% to 70% for the first property and 60% for the second unit. In addition, the LTV ratio was further cut for expatriates to 50% for the first unit and 40% for the second unit. The new rules are expected to be enforced at the start of 2013.

Gross rental yields are now attractive in Dubai, at up to 7.2% as of November 2012. Total property purchase costs are around 3%-7%. There are no property-related taxes in Dubai, which accounts for the low transaction costs. There is only the 2% registration fee and real estate agent’s commission (1%-5%).

There is no income tax, but there is a 5% tax on residential leases, assessed on the rental income. There is no capital gains taxation in Dubai. Inheritance tax regulation is still under debate. It is hoped that the position will be clearer once the new Land Law is enacted.

Landlords should note that there is a rental index in place since 2009 to govern rent increases and there are no official eviction laws in Dubai.

In conclusion, with the economy again growing and property values rising, 2013 sees Dubai once again a strong market for property investment.

Country stats

Area: 77,700 sq km
Population: 4.6m
Principal cities: Dubai (Abu Dhabi,UAE)
Median age of population: total: 27.7 years, male: 35.7 years, female: 22.4 years (2004 est.)
Language: Arabic (official), Persian, English, Hindi, Urdu
Employment rate: 97.6%
Flying time from UK: 7.3hrs Currency: 1Dirham = 100 Fils
Time difference from UK: Abi Dhabi – UTC/GMT +4 hours
Rate of inflation: 0.95% (2003 est.)
International dialling code: +971
GDP per person: $45,653
Climate: Desert; cooler in eastern mountains
House price inflation: 11%

 

Useful websites:
Dubai Land Department

 

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