Dubai matters as a global hub

Investing in luxury homes in Dubai is proving a safe bet — both on the upside and on the down.

If in the five years to end 2014, prime property values were up by 59 per cent — better than the likes of London (up 52 per cent), New York (47 per cent) and Hong Kong (31 per cent) — the decline since then has also been slower than in the rest of the market, according to Knight Frank findings on global hubs.

“In annual terms, prime home prices fell by 4.5 per cent in Q2-2015; however, this was a smaller magnitude of decline compared to the mainstream segment’s 12.2 per cent decrease,” the report states.

“Also, the new residential supply pipeline for the prime segment is not significant, suggesting that prices over the next 12-18 months should maintain a greater degree of resilience.”

Even on the office property side, Dubai is seeing some parity between demand and supply. The sheer number of projects launched during 2008 have more or less been completed and the stock easily absorbed by tenants. “Office take-up has been rising and the availability rate has been heading down — leading to increasing investor demand for institutional-grade buildings,” the report adds.

As of the second quarter, Dubai’s office stock was estimated at 52.2 million square metres, while the vacancy rates were a manageable 17 per cent. During the same period, average rent for Grade A office stock (outside of its free zones) would be around $542 (Dh1,990) a square metre, which compares quite well with the $2,080 that offices in Hong Kong command. These are at $2,058 a square metre in London and $1,146 in New York.

“The fact that the UAE is increasingly becoming an easier place to do business [it has steadily been climbing up the World Bank’s ranking since 2011 and placed 22nd out of 189 countries in 2015] also helps. It takes just eight days to start a business — not too far off the six days needed in the UK and US, and less than the 15 days required in Germany.”

Source: Manoj Nair, Associate Editor,


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