Expert Eye: What attracts investors to Dubai realty

Expert EyeManish Khatri

Several global studies position Dubai among the world’s most sought-after cities in terms of real estate investment, thanks to its strong economic environment and infrastructure.

The emirate is already a cosmopolitan city ranked among the world’s most promising financial hubs. It attracts many foreign investors as the market is largely dependent on tourism and immigration. Investors from around the world prefer the city considering the quality of existing and new projects in its property sector.

Dubai continues to outperform many emerging markets, thanks to a robust diversification programme by the government. The economic performance forecast is strong in general, and investor confidence in the realty sector is being enhanced as a result of economic stability, along with increased inflow of expats and tourists.

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The market will attract wider investor interest in the coming years for a number of reasons. The biggest bull run in the sector is predicted to happen in three to four years.

A number of strong government policies, along with ongoing mega development projects, drive the realty market, leading to remarkable growth in terms of demand from foreign investors.

The recent increase in property deals by foreigners underscores the impact of economic rebound on Dubai’s appeal as an investment hot spot, coupled by the requirements fueled by Dubai’s preparation to host Expo 2020. This momentum will continue in the next five years.

The diversity in nationalities of property buyers in Dubai shows that the market is international. The major chunk of property buyers here are Indians. Citizens of other nations, including Saudi Arabia and other GCC countries, USA, Russia, China, Singapore, Iran, Europe and other Western countries, also continue to invest and reside in Dubai.

The high-net-worth individuals from India who invest in Dubai are looking for return on investment in the form of capital appreciation, or lease or rentals from assets. Many of them reside in their properties to enjoy the value of iconic addresses.

Geographical proximity to their home country and a desire to purchase property for their family members living or studying in Dubai make this market more appealing to Indians.

There are a number of other factors driving buyers from India to purchase property in Dubai. The emirate has always been the most favourite choice for international investors because of its strategic location, tax-free system, assurance of attractive rental yields, facilitation of rentals and activation of the resale market.

Considering the current options and price levels available in the market, it seems very attractive compared to other major cities. Prices in many areas of Dubai are normally much lower than certain areas of other prominent cities when talking about price per square foot. In fact, the price per square foot in Dubai can be down to one fifth to one eighth of the price in cities such as London, Monaco, Hong Kong or Mumbai.

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Savvy investors have recognised this growth potential, reaping rewards, both in capital growth and rental return.

Dubai’s tax-free property status mainly lures these foreign investors. Other major factors that attract them to this market are the safe-haven appeal of the city, tightly regulated property market, solid national economy, excellent growth potential and strong capital value gains.

The city’s lifestyle offerings, security and peaceful atmosphere are also among the most important influencing factors to identify Dubai as a property investment destination.

Source: Manish Khatri, Special to Properties
Vice President, SPF Realty


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