Dubai Real Estate Market
Whatever you might have heard about Dubai's over-the-top property boom, witnessing it still can be a shock.
Stand on the top floor of the world's tallest hotel, the landmark Burj Al Arab - which is as high as the Eiffel Tower and has the world's tallest atrium, at 180 meters, or 590 feet - and look out to sea. You can see Palm Jumeirah and the World taking shape, two vast offshore residential projects that will be visible from space when they are complete. (Most of Palm Jumeirah has been sold; the World has 250 man-made islands for sale at $7 million to $9 million each).
Look inland, across what was desert two years ago, and cranes are everywhere in this portion of the United Arab Emirates. Madinat Jumeirah, a vast hotel-restaurant complex, is finished. But work is continuing on other big projects.
There is Burj Dubai, which at 800 meters will be the world's tallest tower linked to the world's biggest shopping mall. The Dubai International Financial Center, a 45-hectare, or 110-acre, commercial-cum-residential project, is intended to realize this city's long-held ambition to be the Gulf's financial heart. Then there is Dubailand, a huge theme park to be completed in 2010.
Dubai already has spread north into the neighbouring emirate, Sharjah, and is growing southward, through the upscale seaside suburb of Jumeirah toward Jebel Ali, which is 25 kilometres or 15 miles away. Approval was given recently for a $3.9 billion light-rail project that will connect Jebel Ali to Sharjah, a service that the authorities hope will ease Dubai's burgeoning traffic problem.
Ever since the summer of 2002 when Dubai allowed investors of any nationality to come in on select property developments, the face of Dubai has never been the same. The vibrancy in Dubai’s property market can be seen from the fact that projects worth over US$ 30 billion are currently under development in Dubai. Further, US$5.5 billion of new construction related projects have been tendered since the beginning of 2004, and between 2004 and 2010, the total investment in the real estate sector will be in the range of US$ 50 billion.
Even businesses in the real estate sector are struggling to keep up with the sheer pace of developments in Dubai. As soon as properties are released - and this often happens before they are completed - they get snapped up and are often sold on at a significant premium. Those who could have bought Dubai property two years ago, and did not are already kicking themselves.
Villas on The Palm Jumeirah have doubled since the launch and buyers have enjoyed tremendous capital gains with a down payment of only 10%. Initial buyers of The Meadows villas have enjoyed 30% to 50% price gains with just a 20% down payment.
Among the recent residential additions are the Dubai Marina, a $10 billion project that features luxury homes for 150,000 residents, and the equally luxurious Emirates Hills.
At Emirates Hills, for example, two-bedroom Springs Town Houses measuring 1,690 square feet, or 150 square meters, were sold by the developer in 2002 for about AED 500,000, or $136,000; they now exchange hands for AED 700,000.
Prices for larger houses in the complex show the same trend. Four-bedroom, 3,578-square-foot villas and six-bedroom, 4,924-square-foot villas were sold for AED 1.23 million and AED 1.75 million respectively. Now, if they are available, they go for AED 1.7 million and AED 2.5 million.
In September 2004, 100 new residences were released at the 2,000-unit golf- and equestrian-themed Arabian Ranches development. Hundreds of would-be buyers lined up in heat of 45 degrees Celsius, their deposit money in hand. Most of the estate's five-bedroom, 2,456-square-foot houses already have sold, with many now fetching as much as 30% more than their original selling price of AED 1.55 million.
To further enhance the appeal of Dubai as the top tourist destination in the world, Dubai is forging ahead with a US$5bn project aimed to give the Middle East its own version of Disneyland's wholesome family entertainment.
The "Dubailand" theme park will be built on a two billion square feet (185 million square metre) swathe of desert and will comprise 45 different developments with labels such as Aviation World, Motor Racing World, Arabian Theme Park, Pharaohs Theme Park, Snow World and Dinosaur World.
The estimated cost of the project is AED 18bn (US$5bn) with the Dubai government already contributing AED 2.6bn (US$700m) for infrastructure work, while the remaining amount will be raised from investors both inside and outside the UAE.
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