|
| • Dubai
has also been lucky with its timing. Record low
interest rates and dismal stock markets are good
news for realtors. |
| • There
is another good reason why Dubai property is a hit.
Because the Dubai government is behind the real
estate boom, and has secondary motives such as attracting
wealthy immigrants to the city, villas and apartments
are being sold very cheaply. |
| • One
way you can judge if real estate is cheap, or not
is to look at the yield, or rental return. In the
case of Dubai a basic yield of 10% on residential
property compares with a 6.5% local mortgage rate.
Now in London 3-4% would be considered good a good
yield today, so 10% implies a considerable undervaluation
of property. |
| • Of course,
an increase in the supply of property may reduce
yields in Dubai. However, that will take some time.
The buyers of apartments on Palm Island will not
actually move in until the end of 2005. |
| • Indeed,
the problem is rather the reverse in Dubai. The
supply of property is not keeping up pace with demand.
A city with a GDP growth rate of around 8% sucks
in new people all the time and has a burgeoning
demand for housing. |
| • That
would mean that villa and apartment values will
ratchet still further upwards as freeholders take
possession. For the time being buying property in
Dubai looks a sure fire winner, if you can find
a property to buy. |
