Subcontinent's investors eyeing Dubai commercial property
Wednesday, 14 November 2007
Ryan Mahoney
When it comes to buying property in Dubai, luxury apartments and villas are the obvious choice, but there is an increasing opportunity outside of the residential sector. Not always considered, Dubai's commercial sector is becoming increasingly popular with individual investors, speculators and end users alike.
Since the start of the year, we have witnessed tremendous growth in the number of commercial sales transactions. So, what has prompted this trend?
Firstly, as with all periods of growth in real estate, it boils down to supply vs demand. Currently, commercial property in Dubai is in high demand while supply remains extremely limited, with the availability of Grade A office space well below one per cent. Whenever demand outstrips supply, it's reflected in price, which tends to increase until supply eventually evens out.
Secondly, and an important point to note, is that anyone can buy commercial property. Yes, that's right, the man on the street looking for a good return on investment can opt for office space in the same way a multinational corporation can. In Dubai, commercial freehold property is available in many areas, including Business Bay, Jumeirah Lake Towers, Tecom and DIFC.
You are probably wondering why you would want to buy an office. Well, if you are looking for an investment, then it's for the same reasons you would purchase residential property, namely rental returns and capital growth, which incidentally, are both currently much higher in Dubai on the commercial side.
Likewise, if you are an end user, the high rental rates on commercial property are motivation enough to purchase. We are currently seeing high demand from end users in both free zone and non-free zone areas. That's because it makes good financial sense to take a mortgage out and pay it back in installments rather than pay rent. Even better, at the end of it all, with the capital growth you will have achieved, your company will have an extremely valuable asset.
Traditionally, companies tend to lease offices, but with the current market conditions and the availability of finance on the commercial side, more and more people see buying as a serious option.
A lot of people don't realise that they can get finance for commercial property in the same way they can for residential. Both individuals and firms can borrow. Providing you have the right credentials and satisfy the simple requirements, lenders are willing to finance a purchase in a number of locations across the city.
Dubai's geographic location and its positioning as a trading and commerce hub for the region are large contributors to the growth in its commercial sector. Most expats are here to work and the increasing number of people and businesses relocating here creates an even greater demand for office space, warehouses and labour camps, ensuring the sector will continue to grow for some time.
In terms of price, when compared to cities such as New Delhi, Bombay and Karachi, Dubai is less expensive. For this reason, investors from those countries are looking more and more to Dubai for commercial property, where they feel they are offered better value for money. With the margins for capital gains that can be achieved through the purchase of off plan property and the high rental returns on completion, it's easy to see why buying commercial property makes such good sense.
................
Gulf News
When it comes to buying property in Dubai, luxury apartments and villas are the obvious choice, but there is an increasing opportunity outside of the residential sector. Not always considered, Dubai's commercial sector is becoming increasingly popular with individual investors, speculators and end users alike.
Since the start of the year, we have witnessed tremendous growth in the number of commercial sales transactions. So, what has prompted this trend?
Firstly, as with all periods of growth in real estate, it boils down to supply vs demand. Currently, commercial property in Dubai is in high demand while supply remains extremely limited, with the availability of Grade A office space well below one per cent. Whenever demand outstrips supply, it's reflected in price, which tends to increase until supply eventually evens out.
Secondly, and an important point to note, is that anyone can buy commercial property. Yes, that's right, the man on the street looking for a good return on investment can opt for office space in the same way a multinational corporation can. In Dubai, commercial freehold property is available in many areas, including Business Bay, Jumeirah Lake Towers, Tecom and DIFC.
You are probably wondering why you would want to buy an office. Well, if you are looking for an investment, then it's for the same reasons you would purchase residential property, namely rental returns and capital growth, which incidentally, are both currently much higher in Dubai on the commercial side.
Likewise, if you are an end user, the high rental rates on commercial property are motivation enough to purchase. We are currently seeing high demand from end users in both free zone and non-free zone areas. That's because it makes good financial sense to take a mortgage out and pay it back in installments rather than pay rent. Even better, at the end of it all, with the capital growth you will have achieved, your company will have an extremely valuable asset.
Traditionally, companies tend to lease offices, but with the current market conditions and the availability of finance on the commercial side, more and more people see buying as a serious option.
A lot of people don't realise that they can get finance for commercial property in the same way they can for residential. Both individuals and firms can borrow. Providing you have the right credentials and satisfy the simple requirements, lenders are willing to finance a purchase in a number of locations across the city.
Dubai's geographic location and its positioning as a trading and commerce hub for the region are large contributors to the growth in its commercial sector. Most expats are here to work and the increasing number of people and businesses relocating here creates an even greater demand for office space, warehouses and labour camps, ensuring the sector will continue to grow for some time.
In terms of price, when compared to cities such as New Delhi, Bombay and Karachi, Dubai is less expensive. For this reason, investors from those countries are looking more and more to Dubai for commercial property, where they feel they are offered better value for money. With the margins for capital gains that can be achieved through the purchase of off plan property and the high rental returns on completion, it's easy to see why buying commercial property makes such good sense.
................
Gulf News