Big designs on Dubai

The property market in Dubai is booming - but you have to be quick, says Ginetta Vedrickas
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The Independent Online

As construction continues at an almost alarming pace in Dubai, it's hard not to look at the shimmering silver towers and wonder if supply is outstripping demand. And if so, who is still buying there?

As construction continues at an almost alarming pace in Dubai, it's hard not to look at the shimmering silver towers and wonder if supply is outstripping demand. And if so, who is still buying there?

"British buyers in droves," according to Alex Upson of Cluttons, who are selling a range of schemes by developers Emaar including The Residences at Burj Dubai, the world's largest tower. He sees no sign of the demand for Dubai abating: "On the contrary. British buyers are very strong in Dubai and the developments which we are marketing are selling well."

Upson sees three categories of client: "Fifty per cent are pure buy-to-let clients, 30 percent are speculators and the remaining 20 per cent are what we call 'end users' who intend keeping the property for their own use whether they are living there or using it regularly for holidays."

Foreigners have only been allowed to buy property since 2002 and, while the country's leader, Sheikh Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai, has asked the courts to change the law regarding non-national purchase, there are still outstanding issues in relation to title. "It's not a freehold situation as we know it in the UK," adds Upson. "When the current law is eventually overturned, British owners will have freehold, but in the meantime people are still happy to buy and are purchasing Dubai property hand-over-fist."

Upson denies that Dubai does not appeal to the category of buyer who simply wants a holiday home that they can rent out. "It's a great place where many cultures meet and which has permanent hot weather. You can get anything you want there and the social life is excellent. Dubai is a varied and interesting country, it's not just sea and sand. You are perfectly placed to go up into the mountains and you can get to Oman very quickly, plus it's an excellent base for getting to places all over the world including India, South Africa and the Far East."

Upson believes that the holiday rentals market is set to boom but also points to another demand for rental property from expatriate "collar and tie" workers who have temporarily relocated to Dubai, who he estimates make up around 90 per cent of Dubai's residents.

Dubai's critics suggest that if construction continues at the same pace, supply will eventually exceed demand, a factor which also concerns solicitor Dennis Phillips, head of emerging markets for John Howell and Co., who advise clients considering investing in Dubai. "Your and my idea of a marina might be a few buildings and boats, but Dubai Marina has plans for a hundred blocks which are each the same size of Canary Wharf; so yes, I do think that certain sections of the market could see an oversupply."

Phillips advises buyers to pick their developments and properties carefully to ensure that they will be able to let them, but he also has concerns about local Islamic laws (Sharia law) in relation to inheritance. "Certain areas need clarification, for example in relation to ownership by same sex couples. I'm not sure how Sharia law deals with that one, so it's a bit of a minefield."

But Phillips doesn't see too much risk attached to the current situation with regard to freehold: "Remember that this is not a constitutional democracy, this is a decree by a ruling owner that this should happen and there will be huge red faces all round if it doesn't. I wouldn't advise putting in your entire life savings, but if it's part of a portfolio, then I'd say yes go ahead."

Damac's Gareth Jacob has been selling in Dubai for over two years, during which time he's watched property values soar "sometimes by more than 100 per cent" and he sees no risk for non-national purchasers. "After all, people buy leasehold properties all the time in the UK and nobody questions that."

Jacob is adamant that Dubai as a vision will succeed: "We're now selling heavily all over Europe, not just to the UK, but to Eastern Europe, Russia and especially India, which has a huge population - and we haven't even touched the Americas or Australasia yet where there will undoubtedly be buyers as well." Jacob points to the large demand from buyers who use Dubai as a tax haven who spend six months of the year there and also believes that the rapidly expanding tourist attractions will increase visitor numbers year on year.

Homes Dubai Limited's Zul Suriya agrees: "Over the next 10 years Dubai has a master plan to attract great numbers of tourists with attractions such as Palm Islands and theme park Dubailand. What they've done so far has proved that they can do it - just look at their international airport."

Suriya is currently selling a range of developments including Dubai Marina where one-bedroom apartments are for sale from around £106,000 up to £273,000 for four-bedrooms. Suriya says that new developments often sell out within hours of release with almost instant price increases: "After 30 days all of them have seen increases of 10 per cent, which is a very quick return."

Suriya finds that there is a year round demand for Dubai even in hot summer months: "The British don't go then, but I went in the summer and it was full of Russians and Germans; they don't seem to mind the extreme heat."

Eighteen months ago Phil Robinson bought a two-bedroomed apartment on The Palm and estimates that it has already increased in value by 30 per cent, but it is the place itself rather than a fast profit which appeals. "I love Dubai," he says. "I've been there about 10 times and I love the service and the cleanliness of it." Robinson plans on renting out his apartment but will keep certain periods for personal use: "We always go out in February and I've no intention of ever selling."

Cluttons: 020-7647 7142, aupson@cluttons.com, www.cluttons.com;

John Howell & Co.: 020-7420 0400 info@europelaw.com, www.europelaw.com;

DAMAC Properties: +44 (0)20-7499 9001, www.damacproperties.com;

Homes Dubai Limited: 08700 992400, info@homesdubai.com, www.homesdubai.com;

Homes Overseas Magazine Exhibition is at Earl's Court, London 24-26 September. £3.25 in advance or £6.50 on the door. Children under 16 go free. Half-price tickets, when booked in advance by calling 0870 906 3763, or book online at www.homesoverseas.co.uk/events

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