The Real Estate market in Dubai is booming at the moment, with the city’s population set to expand by more than one million people over the next decade.
Though there are challenges that lie ahead of the market, it is expected to continue gaining momentum over the coming years. Dubai has long been a leading hub for real estate and business in the Middle East, but it has also become increasingly attractive to investors from elsewhere.
The United Arab Emirates as a country features many attractions for people looking to invest in property outside their home country. Dubait is an ideal location for individuals who do not want to be tied down with day-to-day responsibilities and want a sense of freedom and anonymity in their new surroundings. As well as this, the steady economic growth in recent years means that opportunities for businesses are also improving constantly. Added to this, tax laws make it relatively easy to establish a business presence here without taking on too much risk or obligation. Other challenges that are likely to impact future growth include high construction costs and limited building space within residential communities.
Why is Dubai’s Real Estate Market So Popular?
The growing popularity of Dubai’s real estate market is not surprising given the city’s luxurious surroundings and reputation as a leading hub for business, leisure, and investment opportunities. In addition to its natural appeal, Dubai is known for its progressive attitude towards society and the environment, and has implemented a number of sustainable policies and initiatives aimed at protecting the environment. These include the Dubai Green Energy initiative, which aims to make Dubai one of the top 10 cities in the world in terms of reliance on renewable energy by 2020.
Dubai is also enjoying a boom in construction thanks to the increase in population, which is expected to reach 5.3 Million people by 2021. To cope with the increased demand for building space, the government has announced plans to significantly increase the size of the city.
This will mean that residential areas in Dubai will have to deal with limited building space as well as significant increases in the price of construction and development.
Tax Law Changes and Good News for Investors
A number of changes have recently been made to the UAE’s tax laws, which are expected to provide significant benefits for international investors. The most significant of these changes is the introduction of foreign exchange rules. Before now, the price of a property in Dubai has deemed the price of its mortgage. However, prospective buyers would often fall foul of local tax laws by structuring the mortgage in a way that avoided paying full local taxes.
The introduction of foreign exchange rules will mean that the price of a property is now the price of the actual piece of real estate, making it much easier to determine how much tax you owe.
Limited Building Space in Residential Communities
One of the most significant challenges that the real estate market in Dubai is facing is the limited building space within residential communities. The city’s population is expected to increase by more than one million people over the next decade. As well as this, an increasing number of expatriates are choosing to settle in the city, which is also likely to place strain on the residential space available. To meet the increased demand, the Dubai Development and Investment Authority has announced plans to significantly increase the size of the city. This is likely to result in a similar situation to that experienced in Singapore, where residential communities are expected to expand by 32% over the next 20 years.
High Costs for Construction and Development
Another significant challenge that the real estate market in Dubai is likely to face in the future is high construction and development costs. The property market in Dubai has enjoyed a steady increase in demand over the past few years due to a combination of factors, including increased population, increased cost of living, and tax incentives aimed at encouraging investment. Rising construction costs have been an additional factor that has put pressure on the market. This has been a particular problem for developers who are required to make significant contributions to the construction of new buildings.
Increasing Population Growth Will Limit Future Growth Rate
The last factor that will likely limit future growth rate in the Dubai real estate market is the fact that the population is expected to grow significantly. The population of Dubai currently stands at over 1.5 Million people. However, the population is expected to reach 2.7 Million people by 2021. This is likely to put significant pressure on the city’s infrastructure and resources. In addition to this, an increasing population will also result in a decline in the amount of residential space that can be found in each city block. There are also concerns that this will lead to a decline in the quality of living in many areas as the pressure on limited resources increases.
Conclusion
Dubai is an ideal location for individuals who do not want to be tied down with day-to-day responsibilities and want a sense of freedom and anonymity in their new surroundings. As well as this, the steady economic growth in recent years means that opportunities for businesses are also improving constantly. Tax laws make it relatively easy to establish a business presence here without taking on too much risk or obligation.
Leave a Reply