Learn What Amberlamb Think about Property in Dubai

Amberlamb were recently asked to comment on the current state of the property market in Dubai.  The answers submitted by the team to a questionnaire from Adfero, one of the UK’s fastest growing news agencies are published here so that our readers can be kept fully up-to-date and appraised of our ongoing opinions relating to Dubai’s investment real estate marketplace.

If you want to learn what Amberlamb think about property in Dubai today and where there may be potential for investors looking for both rental returns and capital growth in the future then read on…

How do you think the Dubai property market will develop in the near future?

As is often said in respect of Dubai’s property market, there are two very distinctive sides to the real estate market that should be examined separately…

On the one hand you have the off plan marketplace which in the near-term will see profit potential softening as the ability to realise profits from buying and flipping throughout the development process requires ongoing strong demand from other property investors for this sort of property stock - and that demand is just not as evident in the market as it once was.  It is likely that high levels of straight investment into the off plan property market will diminish in the near future.

On the other hand you have the established marketplace which consists of the resale and rental of completed property stock, and quite simply because demand for property in Dubai remains so intense as a result of the levels of inward migration the emirate witnesses annually, this marketplace will continue to attract high demand and return an investor profit potential. 

Affordability is the one aspect of concern to the entire real estate market in Dubai but at least in part this is being eased both by better finance products for buyers and by governmental rental rate increase caps for tenants.

While demand remains intense in Dubai it will be a market of attraction – its property price appreciation attraction has diminished since the early gold rush years…but looking to the longer term Dubai is in a position to support a mature, well rounded property market which will be of longer term interest to investors rather than shorter term interest for speculators.

A recent survey by DSL Exhibitions suggested that Dubai’s residents feel the city has been inundated with luxury properties and there is greater need for more moderately priced property.  Is this likely to have an impact on developers, and if so, what effect will this have on property prices and investors’ profits?

The survey in question aimed to query a representative demographic mix of Dubai’s population; as a result there were a high number of UAE nationals (20%) and Indian nationals (60%) questioned but neither group is currently being specifically targeted by the majority of developers in Dubai. 

Rightly or wrongly the government in Dubai as well as those responsible for the realisation of the vision of Dubai as one of the most glamorous, exotic and desirable nations in the world are aiming real estate developments at the world’s most affluent buyers and investors. 

While it is a fact that Dubai requires many more affordable housing units, it is highly unlikely that many/any (?) developers are going to target the more affordable end of the market in the near term…why?  Because they don’t have to.  While they have buyers taking up their developments they have no need to service other areas of the market and they can make far greater profits through the construction and sale of luxury developments.  It will be up to the government to enforce the construction of affordable housing, and if and when they do this will have a limited direct impact on the luxury end of the market because each end of the spectrum is of attraction to a different type of buyer, investor and even developer.

Is an increase in government regulations in the Dubai property market likely, and how would this affect foreign investors?

Dubai’s government has a very strong agenda.  It is seeking to create a sustainable, affluent and attractive multi-dimensional destination and if any situation arises to undermine the long term ambitions it holds for the emirate then it may well intervene.  Fortunately for Dubai the government is mature and while its overall, long term plans for Dubai are incredibly ambitious, they are possible to achieve which should give investors confidence in the emirate.  An example of how the government has previously intervened can be seen with regard to the rental rate increase caps applied to prevent rental rates spiralling out of control and beyond what residents of Dubai can reasonably afford.  The government did this to protect its residents and citizens and also to protect the economy and rein in inflation.  The decision was long considered, it was not a knee-jerk reaction and on the whole it has had a positive effect on the economy and the housing market.  Investors need not fear the government in Dubai but they should make an effort to understand the government’s objectives, principles and vision.

What advice would you give foreign investors looking to invest in Dubai?

We prefer not to give specific, direct advice to any investor because everyone has a different method of approach, attitude to risk and expectation of their property portfolio – but if pushed we would have to generalise and say that anyone now looking to enter the property marketplace in Dubai would be best advised to consider committing to the long term for attractive rental yields and steady property price appreciation.  Those who wish to realise immediate income should purchase well located resale or completed apartment stock in the vicinity of the central business locations or townhouses and villas in attractive residential communities and/or within easy distance of international schools.  Anyone specifically interested in off plan stock could consider both DIFC and Dubai Land as both will be potential areas of ongoing interest to investors as well as of future interest to buyers and tenants.

Special Reports: Property News for Dubai

Dubai Guide for Property Investors
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Dubai Investment Property Buyer Guide
Buying investment property in Dubai is a straightforward process however there are certain issues an investor should be aware of

Dubai Property Investment Guide
Dubai is set to continue to represent one of the best returning, relatively affordable property investment markets in the world