Other property markets are seeing rental yields drop through the floor. Too many investors buying up properties and not enough tenants to rent them! Ireland, Britain and many of the New European capital cities are seeing yields drop to below 3%. In Dubai, rental yields have dropped from a very healthy 8-9% but are now holding firm at 6-7%. The fact that in Dubai rents are paid in advance, sometimes up to one year in advance, is surely a motivating factor for those considering a buy-to-let property in Dubai. On the downside, service charges on new development can be high, anywhere up to £4000 per annum and may be requested by the developer upfront!
Many too are questioning whether Dubai can sustain the level of growth that the country is experiencing. The property market may be developing at phenomenal rates but is the infrastructure developing with it? Already, Dubai's main highway, Sheikh Zayed Road, is a congested bottleneck being the only major route in and out of the city. Add to that the hundreds of thousands exiting Dubai's Palms [tourists, residents, maintenance workers, hotel staff etc] and you've got traffic mayhem. One of the fastest ways to travel around Dubai could be on water taxis but in temperatures where the sea is too hot to swim in, how many people are going to want to travel in such uncomfortable conditions. An air conditioned car is the only way to travel in Dubai. Failure to moderate demand or accommodate it through improved infrastructure could lead to Dubai's downfall.
If the property market in Dubai is to develop with any degree of stability, capturing the interest of second homeowners and expats seeking to relocate is essential. If the market continues to be speculator driven, the possibility of a speculative bubble is not unlikely. However, the recent revision of property ownership laws for foreign investors should encourage a more stable property investment climate, helping to avoid any crash that might be caused by a quickly exhausted investor base of opportunistic speculators.
About DubaiThe city of Dubai is the main population center of the Emirate of Dubai, one of seven which joined to form the United Arab Emirates in 1972. Ruled since 1833 by the Al-Maktoum Dynasty, Dubai is located on a sheltered harbor and was already one of the principal ports on the Persian Gulf by the 1870's. In 1903 it became a major British port of call, and the city remained as a protectorate of Great Britain until the Trucial States were declared independent in 1971.
Dubai was originally a small fishing town, and became prosperous through an economy based on pearls and international sea trade. By the beginning of the 20th century the city was famous for having one of the largest souks (markets) in Arabia. In 1966 the discovery of oil in the region brought a new era of prosperity to Dubai. Today its economy is diversified, with oil taking a back seat to trade and manufacturing. Its free trade policies distinguish it from the other emirates within the nation, making it a special economic zone somewhat like Hong Kong.
Today the city of Dubai is one of the wealthiest and most modern anywhere, boasting the highest skyline in the Middle East including the two of the tallest hotels in the world. It attracts a booming tourist business, drawn in part by major sporting events including horse races, boat races, tennis matches, and air shows. It is also a major shopping destination and an extremely international city, where only one quarter of the population consists of native Emiratis.