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While Ramadan has been traditionally a slow season for the property market, market insiders say the investment climate in the GCC has remained positive, driven mainly by opportunities that continue to emerge in the UAE. The Dubai Property Market, in particular, continues to be seen as a safe haven by GCC investors, who accounted for the biggest chunk of real estate transactions in the emirate in the first quarter. According to Dubai Land Department (DLD), GCC investments reached Dh9 billion in the first three months of the year, building on the Dh44 billion generated from the region last year.
Emiratis accounted for Dh6.1 billion of transactions among GCC investors, while Saudi nationals followed with Dh1.8 billion. In terms of asset class, GCC investors have a variety of options ranging from high-yielding residential units in areas such as Discovery Gardens and International City to sophisticated office markets where yields can range from 7-9 per cent. Worker accommodation is also becoming a popular investment class, with yields that can go higher than 10 per cent.
GCC investors are particularly important for residential developers, given their ease of travel to the UAE. Last year 3.3 million people from the GCC visited the UAE, increasing by 12.8 per cent from the previous year and accounting for the country’s largest share of visitors. Saudi Arabia and Oman were the emirate’s top two tourist markets in the region.
"People come here regularly with families on holidays, or perhaps to take a break on the way to other destinations, and it makes sense that instead of renting every single time, they own property here,” says Farhad Azizi, CEO and Vice-Chairman of Azizi Developments. “Serviced residences and small apartments in this sense are useful since they are easy to maintain.”
With the UAE a favourite destination among GCC travellers during Ramadan, Azizi believes this presents a huge opportunity for the property market.
“A majority of our property buyers are GCC nationals, so for us this is a good opportunity to help investors and future owners to learn more about real estate investment and show them to potential buyers who’d be visiting the UAE during Ramadan,” says Azizi, whose company launched three projects in the first quarter, including Royal Bay Residence on the Palm Jumeirah and serviced apartments in Al Furjan. “The number of tourists from the Gulf countries registered considerable growth during the past four years and the momentum is expected to continue in future. We see this as a great business avenue, even though traditionally sales tend to weaken during Ramadan. But we are quite bullish.”
A number of projects were also launched ahead of Ramadan, including Dubai Property Group’s Marasi Business Bay along the Dubai Canal, which was announced in May, and the Bellevue Towers, which is located in the same area and offers 300 residential units.
"Marasi Business Bay will be developed in phases and work has already started,” says Mohammad Abdulla Al Gergawi, Chairman of Dubai Holding. “The first phase, The Promenade, will be completed by September in line with the opening of the RTA’s Dubai Water Canal project, followed by The Park and The Yacht Club. A substantial part of the development is set for completion by 2020, with overall works concluded by 2023. The total investment cost exceeds Dh1 billion and will be self-financed in partnership with local financial institutions.”
GCC investors in the UAE are also being lured by payment plans and attractive commissions, which agents say is helping generate attention for mid and high-end property. “If we talk about Dubai, mostly GCC investors are looking to buy midrange properties for rental purposes and want to invest Dh1 million to Dh6 million in different small-ticket properties,” says Inayat Vastani, Property Consultant at SPF Realty. “End users from the GCC look for mid and high-end properties and we are getting good inquiries for luxury properties.”
Developers are offering higher commissions to agents across the board and during Ramadan some key developers are offering discounts on certain fees, including DLD fees, tailored payment plans or both. “High-end investors have invested with us in luxury property in Downtown Dubai and City Walk, as well as prime waterfront property in Jumeirah during the past few months,” says Kinshuk Kulshreshtha, a real estate adviser with FAM Properties. “Towards the lower end, we have seen a lot of interest from GCC investors in new affordable town house projects at Dubailand and Emaar’s Hills Estate.”
While Ramadan has traditionally been considered a slow time for sales, developers and agents are hopeful that a combination of innovative packages and sustained interest from within the GCC will keep the market in the region and the Dubai Property Market particularly, buoyant.
Source: Manika Dhama, Special to Property Weekly