Investment Property in Dubai - Take the Long-Term View

There is still so much speculation in the property market in Dubai, but this does little for the long term stability of Dubai’s real estate market.  So, is there anything to suggest that Dubai can overcome its image as a place to make a quick killing and develop a mature real estate market whose fortunes mirror the likes of London’s or Hong Kong’s for example?

The answer to this question is definitely ‘yes’ - and to get the most out of investment property in Dubai is to take the long-term view.  In this article we examine the factors in place that highlight the fact that Dubai’s property market will mature and become a high returning, sustainable environment for investment for all those who commit to their property assets for the longer term.

In Dubai at the moment off plan stock is still booming in supply terms - and for the moment at least demand for such stock from real estate speculators is also booming.  The trend remains the same – buy off plan and flip on to realise capital gains as quickly as possible.  But this method and approach to property investing does nothing for the long term prospects of Dubai’s property market and it is simply not sustainable.  It is totally reliant on the fact that there will remain constant demand for resale stock and this is just not the case.

While it is fair to compare Dubai to London or Hong Kong in terms of demand for real estate, it is rental real estate that will remain in most demand in Dubai because the population of the emirate is relatively transient.  Most expats in Dubai come and work there for a fixed period of time before moving on and the majority still prefer to rent.  So…the future is very much in the rental market for an investor.  Those who buy today should be looking to hold their property stock, derive an income from it and ride the typical real estate cycle that will begin as soon as the market matures a little more.

In the short term the property market in Dubai could be due a downward dip or even a period of property price stagnation – but in the greater economic scheme of things there’s actually nothing wrong with that.  Such a situation is needed in Dubai to rid the market of speculators stripping it, and it will also remove any developers who are financing their projects on the back of proposed stock sold.  Those in a weak financial situation will go from the market and this will leave behind an environment built on very real supply and demand dynamics.

Looking to the long term there is just so much in Dubai to indicate that it will have a mature property market.  It is developing as a tourism destination of some note and will be boosted in this regard when Dubailand is completed, it is already a business capital in the region and it will likely remain so with its sophisticated free trade zones and its low/no tax policies.  And in addition to these positive factors is one fundamental consideration that is worthy of regard above all others – if Dubai succeeds in establishing itself as a leading financial centre and a player on the world stage alongside New York, Hong Kong and London, its property prices will rise higher and higher along with demand and Dubai will become one of the most densely populated locations on earth where the demand for real estate is coming from an incredibly affluent public.

We are of the opinion that anyone hoping to profit substantially from investment property in Dubai takes a long term view of the real estate market and also their commitment to it…if dips and troughs occur and negatively affect property prices, over the long term as history has indicated in the afore cited locations such as Hong Kong, London and New York this matters not as demand will always be intense and the market will keep following the cycle - there will be strong rental yields to derive from property assets and sustainable and strong growth to eventually realise from the resale of property stock.