Investment Overview
Why Invest in Dubai?
Dubai has become an attractive place for both investment and property development in recent years. There are a number of reasons for this, including the following:
Location- Central Location
The United Arab Emirates lies along on the Arabian Gulf with a total land area of 83,600 sq km and includes over 200 islands and coral reefs. Dubai is a member of the Federation of United Arab Emirates established in 1971 after being declaredindependent from Great Britain. The UAE consists of 7 Emirates: Abu Dhabi; Dubai; Sharjah; Ajman; Umm Al Quaim; Ras Al Khaimaih and Fujairah. The UAE is a politically stable country ruled by The Crown Prince of Dubai, HH General Sheikh Mohammed bin Rashid Al Maktoum. Legislative and executive power rests with the Supreme Council - the hereditary rulers of the seven emirates - who choose a president from among themselves. Dubai is also mid-way between the Far East and Western Europe, around 6 hours maximum flying time from each direction.
Economy - Growing Economy
Dubai operates a broadly based economy with 90% of Gross Domestic Product (“GDP”) coming from non-oil based sources. Both trade, which represents 16% of GDP, and tourism, at 17% GDP, are important sectors of the economy, which is expected to generate US$ 128.6 billion in 2005 and grow to US$ 220 billion by 2015.
Dubai is one of the wealthiest and most modern cities in the world and boasts the highest skyline in the Middle East. It is the location for the only 7-star hotel in the world, the Burj Al Arab. In addition, the Burj Dubai and Dubailand are in the course of construction. The Burj Dubai is expected to be the worlds tallest building and Dubailand is expected to incorporate the world’s largest shopping mall.
Dubai Property Market - Growing Market
Over the last 3 years the Dubai property market has grown from US$0.8 billion in 2001 to US$3.2 billion in 2004. Whilst the directors do not expect growth to continue at these levels, it is thought that the Dubai property market is now at the early stages of a period of sustainable and long term growth.
International Trading Hub - Regional Trading Centre
With Port Rashid lying on one of the few deep creeks in the area, Dubai has a long tradition as a trading hub in the Gulf. Dubai International Airport is the busiest in the region. Dubai is also an important centre of non-oil manufacturing industries including aluminium and is the Gulf leader in re-export trade, much of which passes through the Jebel Ali Tax Free Zone.
Population - Increasing population
The total population of the Dubai Emirate was 1.433 million in 2004. Dubai is a rapidly growing multicultural environment with more than 185 different nationalities residing there. The population is expected to grow to 2.2 million by 2010.
Tourism - Developing Tourist Destination
The multicultural environment, coupled with first class leisure developments and year round sunshine have combined to make Dubai a popular holiday and conference destination. Tourist numbers are expected to swell from 5.42 million tourists per year in 2004 to 15 million by 2010.
Dirham - Stable Currency
The local currency, the UAE Dirham, is linked to the US Dollar and no revaluation has occurred since 1977. Local interest rates are therefore a direct consequence of the level of US interest rates. The current weakness of the US Dollar against other currencies such as the Euro and Pound, means that investment is both attracted into the area and local wealth is remaining there, often increasing the demand for real estate assets.
Major Infrastructure Projects Investment in Infrastructure
In order to cope with the increase in trade, population and tourist numbers, many large infra structure projects are underway. These include the construction of a new international airport at Jebel Ali and a Metro rail system, the first stage of which is planned for completion in 2009.
Economic Free Zones - Tax incentives to business
Economic free zones have been established to further diversify Dubai’s economy away from oil. These remove many bureaucratic and legal barriers as well as providing tax advantages. Free Zones are in many cases specific to certain activities and normally focussed on information and commercial sectors, for example Jebel Ali Free Zone, Dubai Media City, Dubai Internet City, Dubai International Financial Centre, Dubai Healthcare City and Dubai Silicon Oasis.
New legislation - Liberalisation of laws
A new land law is currently being drafted in Dubai, and is expected to be implemented in the near future. The Directors anticipate that this will further liberalise property ownership in the country where foreigners are currently permitted only to buy contracts relating to certain property in a number of designated projects.
Demand - Business and Residential Demand
The demand for real estate from both business and residents, as well as the demand for tourist accommodation, is expected by the Directors to result in a continuing and sustainable growth in the Dubai property market for several years to come.