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Until recently, the UK real estate leadership in various world’s rankings starting from luxury housing per square foot cost and up to the return on investment numbers did not raise any slightest doubts between international property investors. Today, however, it seems that the UAE, and Dubai in particular, are gradually gaining the position previously firmly occupied by property offers in Great Britain.
Statistics is tough, and despite all the obvious advantages of London as unofficial European capital, Dubai has already forged ahead in some segments of the world’s housing market. First of all, we are talking about investments in residential real estate with a purpose of lease.
The average return on investment (ROI) is a value, which is calculated by dividing the average property purchase value by its gross rental price. And when it comes to long-term investments, Dubai may well beat London in this sense. To date, the average return on investments in Dubai real estate is about 7 – 8 percent for apartments, depending on the location, and can reach up to 10 – 13 percent for exclusive one and only high-class super-luxury villas on artificial islands. The biggest rental yields Dubai property brings in such areas like Dubai Silicon Oasis, Dubai Sports City, followed by International Media Production Zone and, finally, Jumeirah Village Circle. Apartments there are not as expensive as, say, in Dubai Marina, and, therefore, the ROI can be high enough.
In London, too, there are areas that guarantee a better rental rate than average for the city. They are Islington, King’s Cross and Hoxton in N1, with 3.9 per cent, followed by Chiswick, Gunnersbury and Turnham Green in W4 with 3.8 per cent, and Balham and Clapham South in SW12 with 3.7 per cent. As you can see, in this comparison Dubai clearly beats London. Such low average rental yields in London are caused also by relatively high initial buying price, which sometimes is 10 times higher than for the same offers in Dubai.
In addition, starting from April this year, when buying a second and subsequent properties in the UK the buyer will have to pay an additional 3 per cent stamp duty in addition to the standard stamp duty. Besides, this country, there are also capital gains taxes provided in this country, which are absent in Dubai.
Meanwhile, the process of purchasing property in Dubai is regarded by many as more simplified and fast, and the only fee you have to pay is 4 per cent transfer fee, which obviously is not going to be levelled up.
And finally, the decisive argument in the dispute between two cities on the benefits of the long-term real estate investments is their common future prospects. In Dubai such prospects will be provided by Expo 2020. Experts believe that this event can play the same role for the emirate’s real estate as the 2012 Olympic Games did for London, when housing prices in the Stratford area have gained 64 per cent in value during the next four years after the Games.
Improved infrastructure, roads, new jobs created, vast expansion of the hospitality sector, green construction development and numerous sustainable projects brought to life — all this will be Dubai's heritage left after Expo 2020.
