Global developers make a beeline for the UAE

For the ultra-luxury property market, the stamp duty reforms will have little effect on where high networth individuals spend.A view of 432 Park Avenue, billed as the ‘tallest residential tower in the Western Hemisphere’.Scheduled for completion next year, the developer was this week marketing the tower in UAE.

The race is on for the Gulf investor’s funds. Developers from New York to Istanbul are in the UAE to try and lock in local interest for their pricey projects. By doing so, they find themselves in intense competition with their counterparts from London, who have been going all out marketing their own signature projects in these markets.

All of them have an eye on one juicy piece of detail — Middle East investors are pulling out more of their funds from the region and putting them to use in safe haven realty assets in the US, the UK and Europe.

This week, top officials from Macklowe Properties — the developer behind the 432 Park Avenue skyscraper project in New York and billed as the ‘tallest residential tower in the Western Hemisphere’ — are in the UAE to spread the word.

Scheduled for completion next year, the tower will top 425.5 metres and which well ahead of the Empire State Building’s 381 metres. Launch prices were from $7 million (Dh25.71 million) and climbing all the way to $95 million. The tower will have just over 100 units.

According to a CBRE report published earlier this week, all of the leading US cities were able to attract substantial investments into their commercial realty during the first-half of the year, with New York at the top with $40 billion.

But when it came to having the highest share of international investments into its realty, London was still at the top. UK’s developers are using this and other findings to bolster their case.

“A report from JLL showed that central London is expected to see house price growth of 19.9 per cent over the next five years, which further reinforces its strength as a global property hot spot,” said Chris Lanitis, Director at Amazon Property which has just completed the upscale Pall Mall Collection in Central London.

“Property in London continues to offer significant capital growth which far outweighs the cost of stamp duty in the long run.

“For the ultra-luxury property market, the stamp duty reforms will have little effect on where high networth individuals spend.”

Under the current regulations, stamp duty is paid in bands, with those purchasing homes worth between £925,001 (Dh5.1 million) and £1.5 million paying 10 per cent, while those on properties of more than £1.5 million it is 12 per cent of the final purchase price. (Corporate bodies including companies, partnerships and collective investment schemes pay 15 per cent stamp duty on residential properties costing more than £500,000.)

“Overall, we’ve observed that London developers are increasingly turning their attention to the Middle East as well as to the Far East,” said Lanitis. “These sales and interest has been from the UAE — which would be expected — but we are also finding that Oman, Saudi Arabia and Bahrain are becoming important markets for us going forward.”

But will UK’s political compulsions outweigh the realty sector’s medium-term prospects? There is the referendum coming up in 2017 on whether it should remain as a part of the EU.

According to Adam Challis, JLL’s UK Head of Residential Research, “The decision to be made in the UK referendum is less important than the conversation itself. The London mayoral election is between two candidates both determined to support a resilient story of international flows of wealth — the capital is oriented towards the globe as it has been for centuries.

“There is an acute shortage of stock in London, which requires about 55,000 homes per annum to resolve. The city is currently building about half of that number, which is putting upward pressure on prices,” said Challis, who was making a presentation at the Capital Club.

Source: Manoj Nair, Associate Editor,


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