Real estate market in Middle East is on a roll

source Economic Times

Most countries the world over have been hit by the current global economic crisis and real estate markets too have been facing a slight slump. But the Middle East has proved to be an exception from this order. While US and Spanish markets crashed after years of boom, Europe has been registering some decline, Africa is only showing growth in specific pockets and India facing a slow down. Middle East clearly is the fastest growing property markets in the world today.

According to Shailesh Tiwari who is working with a management consultant in Dubai, "Between 2001 and 2007, the real estate market here has grown 15 times over. There was a bull run especially in the last six to seven years, owing to changes made in property ownership rules, availability of land, low property prices compared to many developed countries and high rental returns. Also, the other major factor is the low interest rates at six to eight percent which is spurring growth. Residents of countries which have been politically unstable are investing a lot in Dubai because if you own property here, you are a resident for 99 years."

Dubai leads the pack as the area where development is taking place at a rapid pace. Following closely behind are Qatar and Bahrain owing to availability of gas. The inflation on rentals is in the order of 20 to 25 percent. The Middle East property market is primarily driven by the speculative investor. In fact, as soon as a renowned developer announces projects, bookings are done. A big brand is a huge draw and top brands include the likes of EMAAR, NAKHEEL, Damac, Omniyat, Al Fajer , Deyaar, Al Barrari, Tameer, UP, ETA, D.E.C.LLC and MAG Group have many takers. The buyers / investors hail from all over the world such as India, Pakistan, USA, UK, Europe, etc.

So what is it that makes Dubai so attractive to foreigners? According to Julieta Lazarova Kitova, a Dubai based property consultant, "The annual residential returns currently range from 10, 15 and 20 percent depending on the area. Dubai Property prices are low compared with other developed countries. Also, there is no income tax or capital gains tax applicable on property sales or rentals in Dubai. There is no stamp duty, legal fees on freehold property in Dubai - apart from a 1.5 percent land registry fee on completion. Rental income from Dubai Real Estate is presently between eight to ten percent."

The prime areas in Dubai which are selling like hot cakes include Dubai Marina, Dubai Waterfront, Down Town, Burj Dubai. Also popular are Jumeirah Lake Tower, Jumeirah Beach Residence, Business Bay, Greens, Sillicon Oasis, and Arabian Ranches. The lowest prices are available in International City.

Typically the size of a studio apartment in Dubai is around 450-550 sq ft, one bedroom apartment 750 sq ft, two bedroom apartment ranges from 1100-1300 sq ft, three bedroom apartment is between 1400-1700 sq ft and four bedroom apartment ranges from 2200-2300 sq ft. The unit price of these apartment ranges from 1500-3000 Dirhams per sq ft, depending on location and amenities. According to property broker Khalid from Sana Real Estate in Dubai, "The average real estate value in Dubai is 2000 Dirhams per sq ft. Earlier the range was 1000-2000 Dirham per sq feet and now it has escalated to 1500-3500 Dirham per sq feet in just a year and a half's time."

Villas and townhouses are also a rage - a 2 bedroom villa of size 1800 sq ft is available for three million Dirhams. Villa sizes go up to 7 bedrooms for w h i c h the app r o x i - m a t e costs can be15-20 m i l l i o n Dirhams.