Flipping Rapid price growth has encouraged


  While the recent poor US dollar showing has devalued the AED, its also lowerered the cost of borowing money to buy property in the UAE. Properties in Abu Dhabi are offered on a leasehold basis of up to 99-years, as there are no freeholds available.The vigorous demand being recorded, could see property prices in Abu Dhabi - which reportedly average around 250 per sq ft - exceed those in Dubai over the next three years, according to UAE investment bank, Shuaa Capital. A medium to long-term property investment strategy will often lower the associated risks. Therefore the existing mechanism is proving a problem. Purchasing costs equate to around 1. Summary With demand heavily outweighing supply, fast appreciating property prices, cheap borrowing costs and strong rental returns, 2008 should prove to be a great year for Abu Dhabi property as an asset class.Buy-to-let Investors seeking a longer-term property investment will be keen to learn that average rents in Abu Dhabi rose by 22 per cent last year, according to HSBC.

  Flipping Rapid price growth has encouraged some speculative investors to resale before theyre even been built, otherwise referred to as flipping.The only way to combat this (inflationary problems) is to lose the peg and allow the AED to float freely, says Nicholls. The city plans to follow the example of Dubai, who recently lowered its cap from secent to five per cent. Property prices will therefore have to rise, so that rental returns achieve traditionally lower yields, as is the case in more mature property markets. If the AED does break free from the US dollar, then the value of the Arabian currency is likely to appreciate very quickly, which will translate back to a greater return to the investor when the AED based property asset is sold and funds returned to the UK. Middle East business provider, AME Info recently reported that some property investors are currently doubling their money in off-plan units in as little as nine days.

  Tax-efficiencyAs a domicile in Abu Dhabi there is no income or capital gains tax to pay, making the emirate a tax haven, and there is no restriction on setting-up residency. Double figured rental yields are currently being achieved by some buy-to-let investors.2billion), is expected to grow to around $44billion (22billion) over the next four years, according to financial group, EFG Hermes. Cheap finance The UAE Dirham (AED) is fixed to the US dollar at one value, meaning the UAE Central Bank has to follow US interest rate policy. HSBC forecasts that average property prices in the emirate will appreciate by a further 25 per cent this year alone. Consequently, there are now murmurings that the AED may finally break free from its peg to the US dollar. However, the falling US dollar is adding to the UAEs inflation problem. But investors should be aware of the potentially high risks associated with flipping properties, particularly in a market that lacks transparency. However, Abu Dhabi is now trying to control rental inflation with a rent cap. The size of the UAEs mortgage market, which currently stands at ec motors Factory around $4. Buying off-plan property abroad and 'flipping' it is not uncommon, particularly in an emerging market like Abu Dhabi, as this can prove to be a highly lucrative way of making money.

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