Dubai Property Investment News

New tax break will benefit Dubai's real estate market

It has been announced that the import duties on steel and cement coming into Dubai are to be frozen, following a 74% increase in cement imports during 2007 to support the continuing boom in construction levels. The decision, made by the emirate’s leader Sheikh Mohammed bin Rashid Al Maktoum, is expected to allow developers to release projects at lower prices which will have a knock-on effect on rent, though these effects will not be immediate.

Dubai imported 3 million tonnes of cement last year, and the growth in imports is expected to continue over coming years as the emirate’s construction boom continues. Over the last six months, prices of cement and steel have shot up by 30 – 40%, putting pressure on the market. Without the customs duty to contend with, developers will be able to look to other sources for their materials, which in turn should mean fewer delays to construction attributable to material shortages.

Meanwhile, investors in Dubai property will note that forecasts for the future of the tourist industry are optimistic. The hospitality sector during the first half of 2007 saw 97% occupancy in five-star hotels; indeed, it is only the shortage of hotel rooms that is said to be holding back the growth in tourism, as demand grows at a faster rate than construction is able to meet. The same goes for the demand for long-term rental accommodation, and indeed the resultant high rental rates mean many would-be renters instead opt to buy.

However, many thousands of hotel rooms are being built to accommodate the stated target of 15 million international visitors to Dubai in 2010, so this will soon no longer be an issue.