British investment in Dubai property has doubled in three years to £2 billion, according to the latest official figures.
Spending that money put British home buyers in the second largest group of home purchasers behind Indians.
Most British property investors opt to buy apartments with low interest rate loans.
The Dubai Land Department, the government agency that regulates home sales, released the information for last year, explaining that the cheap loans, good rental yields and no capital gains tax on investment property make the city a popular destination for British buyers.
The buyers are targeting the neighbourhoods of Dubai Marina, Palm Jumeirah, Jumeirah Lake Towers and Downtown Dubai. Sports City, where developers are offering more affordable home prices, is becoming popular as well.
No tax on property profits
“Dubai is a global hub which is very popular with the British,” said Sultan Al Suwaidi, a partner with one of the companies sponsoring the Dubai Property Show in London later this month.
“Tougher government regulation that protects buyers has helped the market mature and stabilise in a way that gives home owners confidence to purchase and rent out property in the city.”
Rental yields in Dubai are higher than in London, Singapore and Hong Kong – easily generating returns of 7% and 10% a year.
“Many British investors are speculating in offplan purchases to take early profits as property prices increase as they pay no taxes on any profits they make,” said the Sultan.
Home values bounce back
The Dubai government is promoting property investment in countries where high taxes are levied on rental profits and capital gains because there are no taxes on income or gains.
Dubai is also a popular tourist destination. In 2015, 12 million visitors went to the city. This is expected to increase to 20 million by 2020 due to entertainment, sports and Expo 2020.
If investors want to hang on to their properties rather than sell, the prospects to rent as holiday lets is an attractive proposition.
Most local banks will lend up to 50% of the property’s value to expats and investors at low rates.
Dubai property prices have recovered after a slump to climb back to match the previous peak in 2008.