Taz786

Hi,

I moved to Dubai just under 2 years ago and enjoying my experience so far. I can see myself living here for several more years and considering whether to purchase a property in Dubai.

A brief background on myself. I am British and have a property in the UK which is being rented. I am not from a wealthy background and come from a very working class family. I have saved up abit of money (around AED 200k atm and know I can save around AED 500k by end of 2018. I am recently married and renting a 2 bedroom flat which is sufficient for now. But in the future, I would want to move into a townhouse/villa if I am fortunate to have kids. I have a stable job (touch wood) and confident even if I am made redundant from my current role, I can find something else as the industry I work within, as it is growing.

Which option would you recommend:-
1. Purchase off plan now through Dubai Properties/Emaar which will deliver towards end of 2018.

2. Wait till end of 2018 and purchase a ready-made property.

3. Wait till end of 2018 and invest in the UK. However, with the new tax laws and not being able to off-set my morgage payments on rent received is putting me off.

Appreciate your suggestions. Let me know if you need any more information. Thanks

IKnowNothing

Don't. Just don't. You get a lot more for your money in the UK (and many other places) and you don't ever really own anything here.

Taz786

That was my initial thought. But rent prices are crazy. So the property is to live into and sell if I decide to leave Dubai in the future.

A lot of people are scaring me in investing but they are also the ones that purchased the property just before the 08 crash. Those bought it for investment purposes and at the peak. I'm hoping my reasons are the opposite.

Appreciate your thoughts though.

carcajou

Agree with IKnowNothing.

While you are enjoying your experience now, it hasn't even been two years yet and the Middle Eastern workplace is one where a lot can change, very fast.

Whether you can find another position if you are made redundant will depend, among other things, on why you were made redundant. You are not a citizen; your rights in Dubai are not guaranteed and very likely never will be.

At the very least I would not enter into a contract with a mortgage. Frankly speaking you might be better off investigating the impact of putting the savings into your early retirement fund.

Millhouse

Ignoring the usual instability issues of living here that others have said - one issue right now is how over priced they are on a global basis ... even if they look ok in dirham terms given recent falls, the problem is the USD is very expensive compared to all other currencies right now. There will be an adjustment and it is very possible you will make dirham gains and GBP/EUR losses. Unless the USD is your core long-term currency (which if you are British and not Pakistani it probably is not) then buying expensive leveraged USD assets right now isn't such a great idea.

My pension is in USD - so to diversify I have GBP property holdings.

Taz786

@ Carcajou - I have been in the region for 6 years but UAE for 2 of those. Valid point about lack of rights and anything can happen either politically or economic environment.

I can basically forget the dream of owning a house without a mortgage as it will take me ages to save that kind of money.

Need to consider this idea further

Taz786

@ Millhouse - GBP is my main currency and have no intentions on purchasing USD assets.

I will be honest and say I don't have a pension plan. I am dubious to invest in a plan where someone is playing with my money. As much as its their profession, I have been reluctant so far.

My pension plan was to invest in property and read a book called 3+1. Which basically says if you have 3 properties invested at a certain amount, you can survive on the rental income when you retire. If I follow this logic and invest in the property value I am looking into, I was hoping to earn AED 40k per month on those properties which I think is more than sufficient once all mortgages have been paid for.

The surplus in rental income before retirement will pay off the morgage but Osbourne's BTL tax changes has changed my mind in investing in the UK.

Not sure if the above makes sense.

DXBtoDOH

Predicting what this region will be like 30 years from now is nothing but a crapshoot gamble. Therein lies the problem with your estimated rental scenarios. The Gulf is still reliant on oil (even though the UAE has diversified) and while oil prices will surely rise back up (and down and up and down) the tricky factor is that new technologies are emerging that could wean the world off of oil and in 20-30 years oil may be a $10 barrel product. What will that mean for Saudi? Even Qatar? Qatar has nothing but oil and when the wealth disappears much of the expat population will go and the locals will have to adjust to a lower standard of living. Political implications? Ouch. What will it mean for Dubai, even if it holds on to finance/trade/logistics and services? Who knows.

Stable markets like the UK are much more reliable as destinations for investment.

But let's assume that Dubai has a decent future and in 30 years is much like it is now except on a bigger scale. The challenge is that a flat you buy today may not be desirable 30 years from now. Look at the older buildings from the 1980s around Dubai. Construction quality isn't much to write about in this region. Some areas due to location will hold their own ground but other areas less so. It's pretty easy to imagine DSO turning into a Filipino ridden ghetto similar to today's International City or Satwa with cheap flats divided into partitions. The wear and tear must be impressive.

Taz786

@ DXBtoDOH - I feel I am paying over the odds in rent in Dubai compared to buying a property and paying the mortgage. And than sell it once I leave. I don't have money to lose but hate leaving it in the bank and doing nothing.

So far, everyone has been against investing which is a real eye opener.

Sabi Star

''everyone'' here has always been against buying property in UAE. I bought an Emaar flat in 2007 - at the height of prices - I sold it last month at a good profit in Sterling terms. You have to remember when renting the land lord is paying all the maintenance fees to the managing agent and also usually the DEWA which includes the land tax - these can add up to quite a lot. Also remember the buyer pays all the fees when buying - to Land Dept and agent. If you find a ''bargain'' and have a genuinely helpful agent, consider buying but usually with ''bargains'' you have to have cash sitting and waiting. The buyer of my flat was Jordanian and had bought up 9 flats in my building (plus probably others elsewhere) - he also owned a house in Cannes and in Kent. He told me he had only ever bought ''bargains'' in the past.

Meow

Bear in mind that in order to buy in Dubai you need a deposit of 25% (for a purchase price of up to AED 5M) and other costs could by up to 8%, with the Land Department fee being the largest cost. (I have an in-house department that arranges mortgages if you have queries)

The UAE market is very different to the UK. It's far newer so will show more volatility and there are no guarantees. Riskier too as missing mortgage repayment can be a criminal offence with severe consequences.

The market appears to be softening and you really need to do your figures and be prepared to hold the property for the long term, if necessary, without exception of capital growth.


You have also stated that you don't want to invest in USD assets but that's exactly what you'd be doing by buying a property in the UAE as currencies are pegged.

scot47

Best move is to buy a property in one of the more prosperous parts of the UK. Forget the Middle East.

Maxima

When it comes to off-plan, just be extra-cautious


Dubai developers 'unlikely' to deliver on 2017 handover pledges - Property - ArabianBusiness.com

Taz786

@ Meow - I think you need 25% if you're purchasing an existing property. It's only 50% related to off-plan. However, the payment methods offered by big developers ensures you can pay it back over the next 3 years or actual handover.

Usually at handover, its related to 60% off the purchase which you can get a mortgage for the majority of it.

Interesting point about holding it. Need to consider this carefully and realise whether its for me.

Have you not considered investing in Dubai in the past?

Taz786

@ Scot47 - the tax changes as previously stated by Osbourne has screwed up this plan. This would have been my first choice by a mile if the changes hadn't been implemented