Luxury and mid-market realty compete for investor attention

Dubai: Should the next wave of investors in Dubai go for a mid-market option or stick with luxury?

According to the latest Dubai realty overview from Knight Frank, luxury looks to be the best option. “We expect prime residential properties to continue to outperform the market average in the short-to-medium term,” the consultancy says.

In the first six months, the value of deals involving prime properties in Dubai totalled Dh1.1 billion, compared with Dh1.7 billion during the same period a year ago. “However, the prime segment witnessed growth in activity on a monthly basis since January 2016,” Knight Frank reports.

“Particularly in this segment, the limited supply and strong demand from high-net-worth investors looking for long-term capital appreciation, and well-crafted and good quality products, is expected to boost activity further over.

“While it’s difficult to predict when the next growth cycle will be, we expect the residential market to level out by the end of 2016 before seeing gradual recovery in 2017.”

Gradual is the term that analysts are repeating in any discussion on the sort of turnaround Dubai’s property market will have. And the consensus is that some form of recovery will start showing up more clearly from next year onwards.

“While there has been much talk in the market about a dramatic decline in residential prices, akin to that witnessed in 2009, we believe the real estate market is better situated to face any potential threats,” the report adds. “Regulations, government commitment to infrastructure spending, and the realisation among developers of the need to phase out projects in line with demand to avoid an oversupply, lead us to believe the market has become more mature and resilient.”

But that is not to say that short- or medium-term jolts will not be there at all. An unexpected result in the US presidential elections could send the investor community into a tizzy, while any form of new currency-related volatility could add to the uncertainty. Geopolitical tensions closer to home will have their own impact.

“Demand for properties undertaken by reputed developers with proven track records of successful and timely delivery continues to be active,” says Dana Salbak – Associate Partner – Research at Knight Frank. “This is particularly true for off-plan purchases. We also see active demand for properties within developed masterplans.”

Source: Manoj Nair, Associate Editor, gulfnews.comGN


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