Dubai's real estate makes a compelling case for investors

Dubai's real estate makes a compelling case for investorsImage Credit: Supplied

''Why Dubai?''

If global investors are giving a thought as to why they should consider investing in Dubai's real estate, Ian Albert at Colliers International can give a few compelling reasons.

''Keeping money with banks is as good as getting 0 per cent — real estate remains a top consideration for global investors for yield generation and Dubai's residential space provides between 5-8 per cent,'' said Albert, who heads the regional operations at the consultancy. ''While yields may have softened slightly from what they were a year ago, they are still better than those from most other cities.''

And for those investors who prefer to commit to property markets that are not carried away by hype, Dubai ticks that box too. Since September last, Dubai has gone through a phase of fired-up growth in property values, led by highly speculative buying that was created around the aura of the city winning the rights for the World Expo 2020. Between November and late January, asking prices being demanded shot up by 20-30 per cent.

The city and federal authorities clearly were not impressed. In early October, the Dubai Land Department raised the transfer fees to 4 per cent from 2 per cent, and followed immediately by the UAE Central Bank issuing some of the toughest requirements for banks to follow on mortgage lending. By end of February, these two actions had managed to rein in transaction levels, which in turn got sellers to stop asking for super-inflated prices. Clearly, the market was not being allowed to get ahead of itself.

''Property prices have grown steadily since 2009 but the increase in regulation by Dubai Land Department has led to a more stable growth pattern,'' said Hussain Sajwani, Chairman of Damac Group. ''Dubai still remains one of the most affordable metropolitan cities anywhere in the world.''

It may be difficult to convince city residents who have been paying more, much more, as rents, or find that putting up the sums for the down payment on a home is higher than what it was 18 months ago.

But Sajwani has the numbers to back up his sentiment — ''The '2014 Worldwide Cost of Living Survey' ranked Dubai down at 94th place out of 131 metropolitan cities — that is 16 placed lower than its position in 2011 and 38 places lower than in 2003, when it was listed as the 56th most expensive city in the world.''

That there is room for growth is what is driving in the bulk investor. In fact, right through the last 12 months, these investors who are not content with acquiring just a few units are making their money talk. They have picked up sizeable exposures in Silicon Oasis and Sports City, and in some of the mid-market communities at Dubailand.

''What bulk buying tends to do is create a benchmarking value for a secondary location,'' said Samir Munshi, Managing Director of Orion Holding. ''In Dubai's case specifically, these funds are leading to the revival of stalled projects, most of which are in the mid-budget offerings.

''In two or three years' time, with these units getting delivered, it will be a base for budget-conscious buyers to make a possible switch from renting in Dubai to actually owning their home.''

And there's 2020 looming on the horizon. The first of the mega-projects are taking from the drawing board on to the construction sites. The Mall of the World, additional details of which are expected to be revealed at Cityscape, has already grabbed headlines, while Meraas' string of theme parks will anchor Dubai's prominence as a leisure and entertainment destination of the immediate future.

But in sync with such developments, the city's clusters of affordable living need to develop. These need to be as much in the developers' frame of reference as creating luxury abodes.

Saeed Mohammad Al Qatami, CEO of Deyaar, is precise in his views of what the committed developer has to offer. ''There is the need to cater to different segments of the property market and keep constantly in line with the Government's vision. The Government and government-owned entities are the biggest spenders in infrastructure and creating new property stock. Individual developers will do well aligning with that vision.''

Read on the Confidence in Dubai's real estate industry which is at an all-time high

Source: Manoj Nair, Associate Editor,


For Rent


View more properties

For Sale


View more properties