With the alarming situation Dubai is facing nowadays, there is no doubt local and foreign investors are worried about their investment. Many companies if not giving up their businesses are planning to terminate some of their employees and reduce overhead by cutting 20-50 per cent of their salary expenses.
In our company alone, there is a threat that our boss will cut our salary up to 25%, three times higher than the increase of last year. I don't think it is right in the first place. But, if we put ourselves to the shoes of our boss, like them we will also do everything to save the company. Being a project and real estate management company that relies income from foreign investors, we could feel as most companies do that we are in dire financial situation.
Before the recession, I never heard any expatriate whining about how miserable to live in Dubai. While it is true that prices of commodities were soaring, still nobody wanted to leave. Dubai was a dream. But now, I doubt. Many people are competing to hand-over the keys of their apartments to the Landlords and trying to catch the last trip. At the same time investors are hesitant to pay their suppliers and contractors. The worst part is that they are revising the contracts already approved before the recession to bring the current prices of materials and services in the market.
Before the recession, Dubai was the number one choice for property investors. It is no surprise that many of foreign investors have sold or re-mortgaged their investment in the UK and Europe to invest in Dubai with hope of great results. Let me cite some reasons why these people chose Dubai.
1. Dubai is Desirable
Dubai is a desirable location because of a lot of factors. This desirability means that it will continue to be popular for tourism, new residents and businesses. The population of Dubai is set to continue to grow at an amazing rate. Tourists are set to increase to 15m per year by 2010 and to 40m by 2015. It has great weather with sunshine all the year around. It has a very low crime and safe environment. Dubai has been voted the world's safest city for 4 years in succession. The population in Dubai is very cosmopolitan with over 85% of residents being expatriates. Resident Visas are easily available with appropriate residential property purchase. Dubai is a tax haven and a tertiary home for international property buyers and the worlds wealthy - East & West.
2. Great Tourist Attractions
Dubai is the world's leading tourist attractions and a World Leader in many fields. It is a home of various developments. Dubailand is a huge development located towards the desert. It consists of 6 themed worlds & comprising over 200 individual projects. It will soon become the biggest, most varied leisure, entertainment & tourist attraction on the planet 7 times the size of Disney World in Florida. Dubailand expects to employ 300,000 and attract 200,000 visitors per day. The Burj Dubai is the tallest building in the world- It is the iconic landmark, much taller than any other structure. Dubai is building the world's largest airport with twice the capacity of Heathrow. Great Sports Tournaments are held like Dubai Tennis Open, Golf's Dubai Desert Classic, the Dubai Rugby Sevens, the Dubai Grand Prix of Nations and the Dubai World Cup. Extensive Beaches with an enormous beach front, much of it created via the Palms. There are over 47 shopping malls that offer all the leading world brands. Among of these are the Ibn Battuta Mall, Mall of the Emirates, Mall of Dubai and the biggest mall in the world - Mall of Arabia.
3. Strong Economy
The Government of Dubai had the vision to produce a 30 year plan to replace the oil economy with Tourism, Financial Services and Real Estate. Part of this plan was to make Dubai the business capital of the world and the link between the West and growing economies of China and India. Dubai is on schedule with this plan. The high oil price has provided the government with even more investment than forecast and will ensure that this plan is successful.
4. Massive Investment in Real Estate
The investment and growth in property is effectively underwritten by the Government of UAE, which has continued to benefit from oil revenues at a higher rate, and for a longer time than expected. Here are just some of major projects that are essential to fulfilling the massive demand and will provide great investment opportunities for UK buyers.
5. High Property Value Growth
Due to desirability and strong economy, the population of Dubai is set to increase at record rates fuelling demand for property. For the last 3 years property growth rates have been 18%, 23% and 28% respectively compared to the growth in the UK which is set to zero or negative during the current year. The high growth is likely to continue in Dubai at record rates. Dubai was unique in allowing foreigners to buy Freehold property. The buying process is simple, no limitations or restrictions! Anyone can buy! There is no stamp duty, legal fees or survey costs involved in buying freehold property in Dubai.
6. High Rental Yields
Rental yields in the UK are about 3% compared with 7% to 14% in Dubai. The demand is currently so high that the UAE government has put a limit on permitted rent increases to control this. Rental yields also suggest that Dubai property will continue to rise, as the market is not mature. There are no limits on commercial rentals which continue to increase. Dubai hotels have one of the highest occupancy rates in the world at around 85% on average and this is likely to continue as growth in demand will outstrip the growth in supply.
7. No Tax
There is no income Tax or Capital Gains Tax in Dubai. No Corporate Tax either- The only exceptions to this are oil producing companies and branches of foreign banks. There are also no restrictions on capital repatriation which means that your funds can be easily taken out of Dubai if required.