subject: Should Expats Buy Property in Dubai [print this page] Should expats buy property in Dubai? Should expats buy property in Dubai?
In 2008 Dubai's dream world and real estate bubble were unceremoniously popped as the world descended into the depths of recession.
More so than any other Middle Eastern destination, the Emirate was gripped by a panic that put expats at the airport abandoning vehicles and desperately trying the escape the fallout of the potential for deepening debt, and even jail time for some.
The building boom that had once fuelled Dubai's saunter into the global spotlight came crashing down; construction companies cancelled projects and banks tightened lending.
Now, the dust has started to clear, and the housing market that went belly-up is trying its best to reclaim the buoyancy that initially helped it float to the top.
That being said, CB Richard Ellis Head of Research, Matthew Green, advises that expats should be wary of buying property in Dubai.
The right to buy property in Dubai
In 2002, expats and foreign nationals were given the legal right to buy property, sell property and lease property as they wished in Dubai. This piece of legislation, known as the Freehold Decree, was a revolutionary step in a Middle East that had so long worked to discourage foreign ownership, not advocate for it.
"The law made Dubai a far more attractive proposition for expatriates as new developments aimed at foreign nationals began to spring up across Dubai," explains Green.
He goes on to say that the decree helped pave the way for projects like the New Dubai' area, an expansion of the city that became extremely popular with expats and home to the Dubai Marina, Jemeirah Lake Towers and Emirates Living.
Even more importantly, the proliferation of projects made possible by an influx of foreign investment and expat immigration, spawned a massive growth in industry sectors like architecture, engineering, construction and other real estate related services. Employment opportunities began to materialize and job creation was happening fast and furiously.
As a direct result of the right to buy property in Dubai and the allure of tax-free living, a global audience turned its attention toward the Emirate and it wasn't long before it made it solidified a place as an international hotspot.
To buy or not to buy?
As we know, Dubai's spotlight proved to be more short-lived than perhaps any one had anticipated. Green puts property values at reduction of over 60% in some cases, and he even quotes the leasing market as declining 40 to 50% percent from peak rates prior to 2008.
Now, nearly two years since freefall many are once again adjusting their gaze and considering what a bargain it would be to buy property in Dubai. Those that do still own homes are often willing to sell property for a large loss to reduce their exposure to risk, and avoid the stress of the situation of past.
Still, Green cautions expats and foreign nationals to be smart, "an investment should only be pursued with a high level of understanding of the product and its position in the market."
To read more about what Matthew Green, Head of Research at CB Richard Ellis has to say about Buying Property in the Guide, access the original article: Buying Property in Dubai: Risks and Reward.
