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Investment in Dubai – Real Estate

May 13th, 2009 | 99 comments

While we are on the topic of investments why not talk about real estate as well.

A promising market

Dubai has a promising real estate market. So promising that few months ago it was one of the hottest and most rewarding markets in the world. Investors from all over the world were buying property in Dubai and the prices had reached at an unrealistic level. People were making profit overnight. Things were getting out of control.

The crash

Then suddenly the world came under the clouds of economic crisis and Dubai real estate market crashed miserably. Now the situation is that today the prices are more than 50% below what they were when the market was at its peak. And there are no signs of improvement. There is no buyer in the market and sellers are desperate to get rid of their property before it loses any more value. On top of that most lending institutions have either totally stopped providing finance or made it extremely hard to get approved for it. As a result it is almost impossible to buy property through a bank, unless you have at least 30% down payment available to pay in cash. No one is willing to risk the money because no one knows how much further the property values will drop. Everyone is just waiting and seeing, waiting for the market to hit bottom.

The opportunity

There lies an opportunity for those who are willing to take some risks, as well as for those who are paying high rents for prime property. The fact is, Dubai real estate market will bounce back. Sooner or later the prices will increase and profits will be made. As an investor all you need to calculate is how long you are willing to lock your investment before seeing any profit. And let’s be real here. Real estate has never been a short terms investment. People call it most secure investment because in the long term it has always been profitable. What was happening in Dubai during the peak time was never realistic and sustainable. So if you are willing to invest and wait for two to three years, then this might be the perfect time for you to get in. It’s no secret that property in Dubai is of highest class and projects like Dubai Marina, Springs, Palms and so on are work of art. You are getting real deals at the prices they are available at today. You can even negotiate a lower price, which was unimaginable this time last year.

There is also a second group of people who can benefit from the current state of real estate market. There are many residents of Dubai who are paying high rents to live in places like JBR, Greens, Arabian Ranches, and so on. This made sense when the buy price of houses and apartment in those areas was beyond reach. But now, you can just buy the property by making a down payment of 30% (which would be around the same as your yearly rent) and then making a monthly payment to the bank (which would again be same or lesser than what would you pay as rent). Now you are living in your own place and few years later you can sell it for profit. So if you have some extra money which you would spend on rent anyway, why not put it to some good use and invest it in property. Think about it.

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