Added 03/12/07

Do your homework on Middle East

As US and European housing markets slow, investors are looking further afield. The Middle East’s housing markets have been rapidly opening and both opportunities and dangers await property investors, according to a report released today by the Global Property Guide (www.globalpropertyguide.com).

In 2002, Dubai announced that foreigners of any nationality would be able to own freehold residential titles, instead of the originally-proposed leasehold titles.
Soon other countries in the Persian Gulf followed suit, including Bahrain, Qatar and Oman.

Some investors still shy away because of the perceived political and security risks. However, good rewards await those willing to do their homework and explore the market.

Since the Gulf’s ‘for foreigners’ market is still at its infancy, most properties sold to overseas investors are off-plan. This has advantages and disadvantages. One advantage is that the buyer saves on the real estate agent’s fee and legal fees, and the developer takes care of the property transfer procedure. In most cases, the developer also takes care of all maintenance and utilities like water, telephone and electricity connection.

It is claimed many Middle Eastern markets’ property is still undervalued, because the area is still in the early stage of economic development, leaving room for capital growth.

Rental yields in the Middle East are quite high. For example, yields in Cairo's Maadi district are typically in double figures, with earnings of up to 17 percent achievable on 250 sqm. apartments.

In Amman, Jordan, rental yields of around 9.6 percent can be earned on 120 sqm. units. In Dubai, rental yields can reach up to 10.2 percent for 50 sqm. units, and in Marrakech, Morocco returns are up to 8.86 percent for 60 sqm. units.

Investors will find that housing transaction costs are generally low to moderate in the Middle East.

Not all the Middle East is ‘open’. Prospective buyers must check if they can buy in the country of their choice.

Members of the Gulf Cooperation Council (GCC) have harmonized rules for property ownership among their citizens. i.e. citizens of any GCC country can freely buy property in any GCC country. Bahrain, Oman, Kuwait, Qatar, Saudi Arabia, and UAE belong to the GCC. For other nationalities, there are some ownership restrictions.

Morocco allows foreign ownership of residential and commercial real estate without any conditions or prior approval from the government (though foreigners cannot own agricultural land).

Tunisia, Israel, Jordan and Lebanon are generally liberal towards foreign ownership, though there are minor ministerial or regulatory procedures.
In Egypt, foreigners can readily own real estate for personal use. For buy to let purposes, the road to ownership is a bit rough, but certainly possible.
Qatar, Bahrain, Oman and UAE allow freehold ownership in selected areas, especially developed or designated for foreigners. Foreign buyers are automatically granted residency, which extends to the owner’s family, for the whole duration of the ownership.