A reader from the UK living in Dubai wonders whether to buy a home in his native country or go for one in his current base.
With economy improving, investing in UAE property makes sense
I recently moved to the UAE and have some money to invest in property. However, I don’t know whether to invest here or in my home country in the UK. I plan to stay in the UAE for a few years so it would be nice to either own my own home or an investment property here. However, I am slightly alarmed by the highs and lows the property market here has experienced. Should I invest here or stick with what I know in the UK? CD, Abu Dhabi
Both the UK and the UAE property markets, (particularly Dubai) are experiencing a resurgence since the economic downturn. It has been a long, hard slog for the respected property sectors since the collapse of Lehman Brothers five years ago. Now, however, we continue to hear about positive sentiments, especially for Dubai and central London.
What you do not confirm in your question is where in UK or UAE you would consider buying. This is very important because the UK seems to be running with a two-speed property market. Outside of central and greater London, the picture has been quite gloomy in the past, as prices tumbled and a stagnant property market ensued. Only now we are seeing a rosier picture as prices seem to be on the up – but only just.
The UK government’s “help to buy scheme” could be responsible for this improved sentiment and indeed with prices increasing at a rapid rate in some areas, there is now a debate as to how to stop a property bubble from forming. Greater London and particularly central London have not suffered as badly, with foreign investment pouring into prime residential assets. The same can be said of Dubai. Since the Arab Spring in 2011, local, regional and international money has been invested here as Dubai is seen (just like London) as a safe haven and despite its location, close to geopolitical unrest, continues to defy its critics with a robust property market, recovery with arguably still more positive sentiment to come thanks to Expo 2020.
When deciding whether to spend your money here or in the UK, a major factor is whether you are looking to buy to live in or as an investment to rent out. Buy to rent has historically brought much higher returns when investing in the UAE compared to the UK, but I understand what you mean when you comment on the ups and downs of our market here. Remember the UAE has never had a property downturn before and it was a big one, exacerbated this time around because of the impact of the world economic crisis.
So for now we are on the up, but as the age-old adage says: what goes up must come down. This time around the rises are based more on proper fundamentals rather than speculation as before. Do not, however, be fooled: the UAE will have a downturn again, and predicting when this will happen will give you the keys to a well-stocked safe.
For now, though, the UAE has still a lot to look forward to. In terms of legislation, there are many new plans to promote investor protection when buying off plan. This is aimed at avoiding the repetition of investors losing their money, as in the past.
There are more laws in place now to protect landlords and tenants from the effects of rising markets. Spending on airports, roads and transport is at an unprecedented scale now. For Dubai, Al Maktoum International Airport will open its doors to passenger traffic from next month. For Abu Dhabi the extension of the airport will allow many more millions of passengers to pass through its doors. Roads are constantly being improved and added to. Etihad Rail, linking Saudi Arabia to the Northern Emirates, is not a pipe dream but reality. Further extensions to the Dubai Metro are in the pipeline, as is an Abu Dhabi-based system too. A touristic but essential tram system around Dubai Marina will be in operation within a year and developments geared to boost tourist numbers and trade are breaking ground.
Residential plans to increase the inventory are needed as the demographic numbers increase. All this and still we have Expo 2020 to look forward to. While the host city has not yet been named, Dubai is definitely in the driving seat as it garners more and more friends and support along the way.
So given all the above facts, I would spend my money here in the UAE and if buying to live in, enjoy the property without the hassle of having to fight with your landlord on a yearly basis just to agree the rent. Enjoy the experience.
Mario Volpi is the managing director of Prestige Real Estate in Dubai and has worked in the property industry in London and Dubai for the past 29 years. Send any questions to firstname.lastname@example.org