Foreign investor interest and confidence building up

Foreign investor interest and confidence building upImage Credit: Supplied

As foreign investors continue to flex their muscles in Dubai's property market despite headwinds in the past few months, real estate experts believe the emirate is only starting to scratch the surface in its bid to expand its global market base. Foreign investments in Dubai's real estate sector totalled more than $3.2 billion (Dh11.75 billion) during the first quarter, with 6,391 investors from 105 countries channelling funds into the emirate.

Budge Huskey, President and CEO of Coldwell Banker Real Estate, tells PW the growth in financial services, trade, logistics and tourism has contributed heavily to Dubai's emergence as a global business hub and a real estate investment destination. ''The emirate has emerged as a safe, family-friendly and low-tax environment, which combined with its connectivity to other global centres, has fuelled its real estate market over the last decade.''

Global appeal

Coldwell Banker, the oldest residential real estate franchise system with a 110-year history in North America, recently held a three-day global master franchisor meeting in Dubai, with representatives from 11 countries. The company has built a global network of around 3,000 independently owned franchised broker offices in 47 countries and territories with almost 85,000 affiliated sales professionals.

Holding the global meeting in Dubai is a testament to the company's commitment to the emirate, says Huskey. ''Keeping in mind Dubai's global hub status, Coldwell Banker has selected it to host our master franchisor meeting,'' he says. ''Dubai is the future and that is why we are here. The rest of the world is gravitating towards this city.''

Huskey says prices in Dubai have remained very attractive, while the quality of construction and infrastructure is at par with the best in the world.

Commenting on the impact of price correction, he adds: ''With the trimming of prices, there will be sustainable, longer-term returns. This is happening in other real estate markets as well. It shows that the fundamentals are sound and that it is not artificially propped up.''

Huskey says foreign real estate investments in Dubai are a mix of funds, corporates, individual investors and actual users.

US potential

While the emirate has generated strong real estate investment from many Asian and European countries, Huskey believes more lucrative opportunities await. He says similar to what had happened to Singapore, high net-worth real estate investors from the US are now warming up to Dubai and learning more about it in the last three years.

''We are only beginning to scratch the surface when it comes to investment from the US,'' he says, noting that the World Expo 2020 will help bring a lot of attention from US investors. ''The values at the high-end [segment] here are very attractive, along with the lifestyle factors. The residential interest follows commercial and business interests. That is the typical pattern.''

Huskey concurs the strong US dollar is affecting investors holding non-US dollar liquidities and therefore has an impact on overall demand, but he believes this is unlikely to be substantial or long term.

''Investment will continue to come to Dubai, with the tourism industry set to become stronger,'' he says.

Ayman Youssef, Vice-President of Coldwell Banker UAE, says the recent meeting in Dubai discussed the challenges and opportunities in the global real estate market, as well as the impact of regional policies. Despite the lucrative prospects in the market, Youssef points out that real estate is one of the most capital and labour-intensive sectors. ''You have to be fully committed if you are in this sector. And with the current economic situation globally, it is a very competitive industry.''

He says Coldwell Banker representatives from overseas were nonetheless ''very impressed by Dubai and the UAE's growth'' and ''the vision that drives this growth''.

Youssef says most foreign investors are attracted to off-plan projects. Saudis prefer buying in Downtown Dubai, while Indians look more favourably on community developments. Westerners prefer more developed communities, while Russians prefer beach properties.

Did you know that banks in the UAE undertake extensive due diligence measures to assess a borrower's financial health

Source: N.P. Krishna Kumar, Special to Property WeeklyPW


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