Dubai Investment Property

With ever growing prices of property in Dubai, it is becoming increasingly difficult for a normal buyer to pay the entire amount in one go. Mortgage facility comes in handy for such buyers. In mortgage loan, creditor possesses the title of purchased property till the debt amount, along with interest is paid off. In case the debtor fails to repay, creditor can retain the property. In Dubai, mortgage market is all set for an upsurge. Some important features of Dubai mortgage market are discussed below.

Growth Potential:

Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.

Shariah Compliant:

Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.

Interest Rates:

Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it’s competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.

Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.

Dubai liabilities 47.6 billions U.S. dollars, this is more than their country GDP. It has shattered the myth of Arab wealth.

For a long time, the creditors agreed that debtors are in good reputation when dealing with Dubai liabilities. However, Moody’s said in its latest report, the rapid growth of Dubai liabilities, seriously out of the safety border have been difficult to support alone. The United Arab Emirates of Dubai, the central government debt Attitude has become the crux of the matter.

Dubai liabilities and public debt is 1.03 times of GDP

In accordance with the interpretation of the report, the Dubai government-related liabilities in two parts, namely, the rating was 5 indebt companies, as well as the Dubai government-controlled companies with other 12 has not been rated liabilities.

The rated company are: Dubai Holdings (Dubai Holdings Commercial Operations Group), Dubai International Financial Center Investment Company (DIFC Investments), Dubai Port World (DP World), Dubai Electricity & Water Authority and Jebel Ail Free Zone.

Five foreign companies are: Dubai Holding a variety of conventional debt bonds 2.8 billions U.S. dollars, Dubai International Financial Center Investment Company to issue Islamic bonds 1.25 billions U.S. dollars; Dubai Port World Islamic bonds 1.5 billions U.S. dollars, at the same time, the issue of 1.25 billions U.S. dollars Europe’s medium-term notes (EMTN); Dubai Department of electricity and water were issued 1 billion U.S. dollars in order to include Islamic bonds dirhams (AED Sukuk) and accounts receivable 2 billions U.S. dollars bonds (Receiveables Securitization); Jebel Ali Free Zone Le • Issue of 2 billions U.S. dollars of AED Sukuk.

Five companies carry a total amount of the bond rating of 11.8 billions U.S. dollars. In addition, the Dubai government-controlled companies and other foreign debt rating has not included the 35.8 billions U.S. dollars.

Dubai Liabilities Constituted By Various Companies

Among them, according to real estate companies Farmar (Emaar Properties) foreign debt to 2,423,000,000 U.S. dollars; Emirates Group (Emirate Group) 2007-2008 in a variety of debt and borrowing of up to 3,739,000,000 U.S. dollars; and the famous Dubai World Group (Dubai World) is debt 5,500,000,000 U.S. dollars, for the purchase of MGM (well-known U.S. company) of the refinancing; Dubai Ports World (DP World), 2007 fiscal year for all bank borrowings amounted to 2,528,000,000 U.S. dollars; Dubai Holding for the fiscal year 2007, all kinds of bank loans and overdrafts amounted 1,482,000,000 U.S. dollars; and the Dubai Stock Exchange (Borse Dubai) as a result of the purchase of equipment debt stock 3,780,000,000 U.S. dollars; Palm Island Group (Nakheel) 2006-2008 in the Islamic bond issue of 45 billion U.S. dollars in fiscal year 2007, the long-term loans 2,765,000,000 U.S. dollars, a total of Amounted to 7,265,000,000 U.S. dollars; Dubai ports and free zone in the world (Ports & Free Zone World) acquisition financing 1,250,000,000 U.S. dollars; Dubai Air (Dubai Aerospace) syndicated loans 1,000,000,000 U.S. dollars; dry dock Dry dock in the world (Drydocks World) syndicated loans 2,200,000,000 U.S. dollars; Dubai Civil Aviation Authority (Dept.of Civil Aviation) 2009 due 1,000,000,000 U.S. dollars Dubai Islamic bonds and the central government (Central Govenment) 2007 end with 6.9 billion dirhams debt In April of this year’s 6.5 billion dirhams bonds, a total of 13.4 billion dirhams, equivalent to 3,649,000,000 dollars.

As a result, the background of Dubai’s government (Dubai Inc.) total liabilities of 47,616,000,000 U.S. dollars, and in 2006 (the latest GDP data) for the Dubai 46,000,000,000 U.S. dollars, that is to say, overall current Dubai liabilities and public debt is piled up to its GDP of 1.03 times.

Moody’s said the debt for the conservative calculation. Because there are a number of GRI (government-related issuers, the government issuer) of the debt was not released. In the near future to raise funds and 60 billion U.S. dollars of Dubai’s ICD debt did not include them, and this part of the debt, the company is likely to have its debt to raise funds and to use that old. If some of the other bonds, Dubai’s 2006 GDP and its debt ratio will be more than 1.03 times. Because these companies are likely to get government help, these debts may eventually be incorporated into the government’s balance sheet, the Dubai Financial leverage is difficult to complete calculated. The Moody’s believes that Dubai will also leverage on the rise, and more than trend GDP growth rate??

However, if these items can not be completed immediately, leveraged Dubai continue to rise will also be possible to extend the period of time.

The Moody’s report that Dubai may face the risk of the four cores: the implementation of risk, the risk of the global economic downturn, the regional political risk, as well as financing and liquidity risk.

Although Dubai’s economy benefited from the regional demand, but also Dubai’s economy to a large extent dependent on Europe (especially Britain) and Asia, two regions which are to carry out economic adjustment, economic slowdown.

“The future for a long time, Dubai will be more dependent on federal and Abu Dhabi, United Arab Emirates.” Moody’s report said. Moody’s believes that Dubai alone their financial resources may be insufficient to meet a possible crisis.

Moody’s believes that in the next year, Dubai will be unprecedented in the United Arab Emirates rely on the federal government until 2015 its development strategy to develop the project and plans to present its state of development suited to date.

Moody’s believes that the United Arab Emirates as a whole is a lot of capital-exporting countries. Moody’s said that in 2006, Abu Dhabi’s fiscal revenue amounted to 53,000,000,000 U.S. dollars. IMF in a February 2008 report in the financial assets of Abu Dhabi 250000-875000 million US dollars between. The Dubai government-related liabilities of 470 billion U.S. dollars, include assets of Abu Dhabi, is not large.

But Moody’s warned that all depends on the unity of the United Arab Emirates national, if not to save the other emirates, Dubai, United Arab Emirates as a whole a lot of capital for the balance of Dubai’s creditors is meaningless and it will not too optimistic that Dubai liabilities can be taking care of with current situation.

Dubai is one of seven emirates in UAE. Although it is located only 950 kilometers away from unrest Iraq in Middle East, but it’s been considered to be the world’s safest cities. In recent years, the stunning pace of development in Dubai has turned it from a small fishing village into a world-renowned modern metropolis. Dubai and The Gulf region have chosen a different path of development compare to other countries, which is trying to become the world’s financial center. Dubai fully utilize their own resources, with the construction of luxury resorts and shopping sites, as well as open the door to welcome investors and settlers to invest in Dubai. Among them, the picturesque white sand beaches and sunshine all year round has become the most attractive reasons to lure in people.

However, in the 90’s, Dubai beach development has come to it bottlenecks. To address this problem, Dubai decided to build an artificial island which is built on an unprecedented scale plan. Thus, the Palm Island Dubai project was born.

The project has been approved by the Dubai Crown Prince Sheikh Mohammed bin Rashid Al Maktoum. He let his controlled company Nakheel in charge for the project, and personally approved the design of palm trees, since it able to maximize the expansion of the beach area. Nakheel’s sales vice president Hamzah Mustafa described the design as “Every grain of sand can be used to build the beach.”

If you take a look in Dubai of United Arab Emirates from the sky, you able to observe two huge palm trees floating in the azure sea. If you look even more carefully, the palm tree was actually constructed by a number of patchwork containing large and small islands. Other than the palms, you can also see a map of the world which is outline from 300 islands. There’s scaling France, Florida, Ohio are included, even a snow-covered Antarctica are also in the ground under the scorching sun.

However, this picture is not the creation of the nature. It is artificial islands of Dubai’s ambitious plan – Palm Island Dubai project. The program will be worth 14 billion U.S. dollars, is expected to be completed in 2009. By then, the world’s largest artificial island will be completely surfaced.

The construction starts from the Jumeirah Palm Island, Jebel Ali Palm Island, Deira Palm Island and The World, as well as the latter part of the Waterfront. The plan is to build 12,000 residential houses and more than 10,000 apartments. Also includes more than 100 luxury hotels and ports, water theme parks, restaurants, shopping malls, diving sites and other facilities. In addition, an underwater hotel, a world’s tallest skyscraper, an indoor ski resort, a city of comparable size and Dubai’s main park are also in the plan.

People can reach the Palm Island Dubai by boat, car or even take a monorail train. Once the Palm Island is completed, Dubai’s coastline will increase by 720 km. Perhaps by that time, Dubai has to make some changes to the layout on the world map.

The famous construction teams From Japan and the United States, California’s has completed the main part of the Palm Island Dubai. Palm Island’s main feature is built on sand, up to 3 meters above the sea. Ordinarily the local land-based sand do not mix well together, thus they have to go for the smaller sea sand smaller which is in line with this requirement. Therefore, the main project is mainly to complete with the dredging vessel. So far, the construction has consumed up to 50 million cubic meters of sand which is more than half of the total estimation.

Stacking sand is very unstable, if earthquake happening, the entire island would disappear. It is like a small sand pile in the basin, if you pour some water slowly, when you stop the sand is still remained. But once you rock it, the basin will only left the pot mortar. In order to solve this problem, engineers drill into the bottom of the main body to carry out tremor to let the sand subsidence, and then fill the sand until the sand stop subsidence, the main body is then compact.

During the process of stacking the main body, the engineers must confirm the location of the beach. To ensure exact measurement, they use the satellite remote sensing technologies to monitor the work progress.

Jumeirah Palm Island is the first one being developed. It is constructed by a palm tree-shaped artificial islands and form of the crescent-shaped dams. It covered an area of 5.6 × 5.6 km square and located opposite Jumeirah Beach. The construction is huge, man-made island now has been surface and clearly visible. It is expected to complete in 2006.

Followed by an even more gigantic Ali Palm Island, an area of 6.4 × 7.3km2, is expected to complete in 2008. Jan De Nul, the construction company from Belgium, said this Jumeirah project will consume 172 million m3 of rocks. To May 2005, 60% of the earthworks have been completed. And it has been consumed aggregate astonishing 6 million m3 of rocks.

People are more impress on the third project, Deira Palm Island with constructed with an area of 14.5 × 8.9 km2, along with a 21km long crescent-shaped dam. The Deira Palm Island is expected to be completed in 2009. The consumption of rocks will reach 1 billion m3, and increase the length of artificial coastline for 240km.

Construction has gained initial success, and this has inspired even more exaggerated idea of the Crown Prince. He wanted to build the world’s largest pile of artificial islands, this artificial island is called the Great World which will formed by more than 300 small islands in accordance with the map of the world. Upon completion, you can observe the world map which is formed by these 300 islands. Until now, 50% of the construction has been completed, 81 islands have been surfacing from the water.

If you still think this is not big enough, then you can compared it to the recently launched Waterfront Island, the really gigantic project. Waterfront Island is an artificial island area of 81 million m2 which contained of 10 districts, and join together with Ali Palm Island. It is adjacent to 250 of the planning islands and shore communities.

So far, a fleet of 14 barges and 34 boats dredging are shuttling between the sites. They have thrown 181 million m3 of sand and 5.5 million tonnes of stone into the sea. Upon completion in 2008, the amount of sand and stone used will be 321 million m3 and 31 million tonnes, which will constructed a 850km long coastline.

The huge artificial island plan shows that Dubai is vows to compete with Singapore and Hong Kong to become the world’s commercial center, and to compete with Las Vegas to become the world’s entertainment center. Although the Palm Island project is to be completed five years later, however, surprising that the vast majority of real estate has been sold out, even some real estate is now just on the map with the sea.

Brian. Scudder, a real estate agent in Dubai said: “From the beginning we have noticed this phenomenon and it is very unusual.” He describes, from May 2003 since the real estate market launching, the housing prices has been doubled and is currently stand at price of $780,000 – $1,400,000 U.S. dollars.

At present, the Jumeirah Palm Island reclaiming land has been completed. Jumeirah Palm Island, both length and width of 5.5 km, is the smallest island between the four artificial islands. The 4000 apartments and villas will be completed early next year.

Other than buying real estate in Palm Island Dubai, many of the world-renowned enterprises also have the funds invested in this tempted area. U.S. construction giant Parsons and Hill is participating in designing and implementation of Jumeirah Palm Island project. The China Railway Engineering Corporation will also participate in construction of the island. Jumeirah Palm Island has a prominent fringe where they plan to build 23 hotels. Some well-known hotel management group such as Hilton, Marriott, Sheraton and others have been prepared to join forces opening new branches in Dubai.

The Palm Island Dubai (80 square kilometers) which is having a larger scale has also been started surfacing on the sea. Although it only will complete in 2009, but the total houses of 7000 in the Palm Island Dubai, 4500 have sold. According to Mustafa introduction, the real estate buyers including well-known British star David Beckham and Michael Owen, as well as “actors, singers and politicians,” but he refused to disclose the customer’s name, saying only that two-thirds of buyers are foreigners.

According to a survey conducted by Statistics Center of Dubai in 2006, about 85% of Dubai population was made of expatriates. Majority of them lives in rental units. That leaves them solely on landlord’s mercy. Rising rents have long been the biggest worry for these expatriates, with rents getting doubled and tripled in no time. This relation between tenants and landlords became more tensed with issues like landlords vehemently asking tenants to vacate house without any prior notice. Dubai Government first reacted by putting rental caps and now a new law signed by His Highness Sheikh Mohamad bin Rashid Al Maktoum on 26th November 2007 has been introduced. Read on to see what kind of changes it will make.

Tenant’s Point of View:

Tenants are relieved in many ways by this particular law. For instance

• Addressing the issue of abnormal raise in rents, this law prevents any increase or amendment made in tenancy contract for first two years.

• Decided rent will include the usage of utilities like car parking or swimming pools. Landlord must provide the property in sound quality.

• Article 16 of this law puts the responsibility of property maintenance on landlord. But very next article states that landlord shall not make any change which will affect the tenant benefit in any way.

• The landlord cannot force tenants to leave before the expiry of contract with exceptions like tenants failing to pay rent value or if tenant starts using the property for some immoral purpose, etc.

• If the reason disclosed for eviction is possible collapse of property, because of its poor condition, landlord must provide a technical report confirmed by Dubai Municipality.

• Another noteworthy clause of this law is that if landlord restores the property for his/her own use on expiry of contract, he/she cannot rent the property to anyone else for one year. If it happens, the tenants can take legal action against him.

• Tenants should keep in mind that only those contracts are valid which are in written form and registered with RERA.

Dubai Landlord’s Perspective:

• Landlords will be restricted to decided rent at the time of contract for two years. Keeping this in mind they can decide a reasonable rent, taking into account factors like inflation rate and time value of money.

• After two years, rent can be modified. If both parties cannot settle on revised amount, this dispute will be forwarded to judicial committee, who will then decide the amount of rent.

• This law is not valid for hotel establishments and any accommodation provided to employees from their companies.

• The landlords are entitled to receive rent value on agreed dates.

• Tenants cannot make any changes to property without landlord’s consent.

• All taxes due to Government will be paid by tenants.

This new law would definitely keep a check on alarmingly increasing tenant problems. However there are some flaws, which will be dealt with, in near future hopefully.

The investment opportunities in real estate and property are increasing in rapid pace at the moment in the UAE. With nearly one-third of the cranes on the globe are currently getting used to construct buildings in UAE. This clarifies the strange architectural advancement as well as the spectacular designs in the area. The area is now globally renowned and is recognized as the most effective growing economy that create a recording growth rate of over 13% which mainly happen in the real estate and property investment. Because of the fast rising, there are many international buyers flocking to UAE to purchase property.

Uptrend in UAE Real Estate

You can find a lot of reasons that explain the unexpected upturn in the UAE real estate and property market. The experts and professionals coming from all around the world playing some roles in provides the growth and development of the emirates that leads to the entire appreciation of the Dubai real estates and properties. The other thing that help to support the investment of real estate and property in UAE is because of the tax free benefit implement by the local government. This is rather astonishing for many investors as they do not need to pay any tax for the property that they purchase.

Tax Free UAE Real Estate

The UAE real estate and property encourage the freehold possession of property by any foreigners with little paper works that act as sales agreement. The politically steady and fairly neutral environment in Dubai draws in a growing number of foreign investors and causing the price of the real estate keep going up. The presence of a huge number of international companies in UAE has drastically increased the demand for the commercial and office properties. As a result, this has cause the property prices and commercial office rentals to rise very fast.

When take into consideration of all the factors that are happening in Dubai at the moment, most of the people will agree that Dubai has turn out to be a perfect destination for the real estate and property investment. Besides, UAE is also well-known by the world for its man-made marvels of Dubai Palm Islands. UAE keeps to create revolutionary records for its spectacular and architectural structures, which has make it to become the top building developing and making it the most fabulous property market in the world.