The real estate market in Dubai seems to be flourishing more and more each day. We have witnessed an unexpected rise in demand for housing, houses, and apartments as the number of people choosing to settle in this emirate continues to grow. This has encouraged investors to direct their focus and money to this field. To help those investors find greater opportunities, the government has made several adjustments to related laws and made them more appealing. One of these adjustments is the issuing of the freehold law. This law has brought along not only opportunities but also challenges. Read along to discover how and why.
Opportunities that the Freehold law has brought
1. Foreigners can own property
Prior to the issuance of this law, foreign investors did not have the right to own property for life. They could own property for a period that can extend up to 90 years but could not pass that property to their grandchildren or relatives. After the Freehold Law was issued, more investors were motivated to buy properties in Dubai. This has helped to bring additional income to the city and encouraged more foreigners to settle here, bringing new ideas to the market as well.
2. The number of off-plan projects has increased
Developers have had to answer to the ever-increasing demand brought about by encouraging laws such as freehold ownership. People who prefer to invest in the future have started turning to off-plan projects. Off-plan projects provide excellent opportunities as they are less expensive than already constructed properties, but the down payment can be higher. With the added value of freehold ownership, off-plan projects can provide excellent rewards in the future.
3. Increased competition in the real estate market
The sure result of the increasing number of investors in the real estate market is that competition will increase. This has offered buyers and renters a variety of options. Now developers are doing their best to attract these investors with innovative designs, amenities and services. In addition, the value of the price has become more reasonable and affordable to answer the needs of all kinds of investors.
4. Growth in the tourism and hospitality industries
Because more foreigners now own property in Dubai, they are more inclined to visit and remain for extended periods of time. This has resulted in an expansion in the tourist and hospitality industries since additional hotels, resorts, and vacation rentals are required to meet this rising demand. Furthermore, growing property demand has resulted in the creation of new entertainment and leisure alternatives in the city, making it an even more appealing destination for visitors and residents alike.
Challenges that the Freehold law has brought
1. Risk of oversupply and saturation in the market
Though the demand is on the increase for now, the future is never guaranteed. Building more and more properties to answer for the increased need the issuing the law of freehold ownership has brought might result in oversupply. If the supply exceeded the demand for any potential reason, the prices will be at risk of declining.
2. Potential for fraud and scams
The Freehold Law has also resulted in an upsurge in real estate fraud and scams. To entice investors, certain untrusted developers and brokers may make false promises or provide inaccurate information, while others may participate in illicit operations such as money laundering. This might result in huge losses for investors and harm Dubai’s real estate market’s reputation. Though the government is issuing rules to stop such practices, investors need to be careful when entering this attractive market.
To sum up, issuing the rules of freehold ownership in Dubai has potentially and significantly helped this market to advance and grow. However, this law has brought both opportunities as well as challenges. Are there any other challenges or opportunities that you would like to add to our list? Please share all the answers that you have in the comment section below. As it is always the case we cannot wait to hear from you all.