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She has been described in the media as the “Billionaire’s Broker”. US luxury real estate expert Joyce Rey took the opportunity of visiting Dubai for the first time during the recent Cityscape Global exhibition. In an interview with PW, Rey, who is Executive Director at Coldwell Banker Previews International, indicates that Dubai is attracting heavy interest from affluent American investors as well.
Hub of luxury
Dubai has joined the ranks of London, New York, and Paris as a hub for luxury real estate investments—the ultra wealthy are now buying into high-profile commercial and residential properties within the emirate, as per figures published by the Dubai Land Department, with almost 75 per cent of prime real estate buyers in the city being foreign investors.
“After London, Dubai is emerging as a hotspot for foreign investments in the Europe, Middle East and Africa region,” says Rey. “As an increasing number of American firms invest in Dubai’s infrastructure, the awareness of its appeal is growing. Over the last few years, Dubai has become synonymous with wealth, on par with cities such as London and New York.”
As per the Dubai Land Department, foreign investment in the emirate’s real estate market topped Dh12 billion in the first quarter of 2015. Meanwhile, the average listing price of luxury properties in Dubai stands at almost $6 million, with 8 per cent of the emirate’s luxury properties listed in the super prime range of over $10 million, as per a report released by Wealth-X, the global luxury residential real estate report 2015 by Sotheby’s International Realty.
“An emerging trend in the luxury residential real estate market is to invest in an area heavily inclined towards tourism,” says Rey. “Dubai not only checks this box, but with the World Expo headed to the city in 2020, tourism is expected to hit unprecedented highs. As per its government, Dubai is set to draw over 25 million visitors during the Expo’s six-month run in addition to the projected annual international visitor traffic of 20 million by 2020.”
Rey also touched upon real estate trends and luxury real estate on a global scale, as well as ultra high-networth individuals’ (UHNWIs) interests in investing in the UAE property market.
She says the iconic structures and projects in Dubai has caught the world’s eye. “I was staying at the Burj Khalifa during my visit. The elegant simplicity of the exterior as well as the interior were what made this structure extraordinary in every respect. Clean lines, soaring ceilings, beautiful detail, and a breathtaking view further complemented it. It’s understandable that affluent investors from around the world would want to invest in this structure.”
Stop and marvel
She is impressed by what she saw in Dubai, and says the massive and creative work that has gone into the city is phenomenal that one has to stop and marvel. “It is hard to pick any one project, but the upcoming Opera House is going to be a show stopper, as culture is a very important factor in luxury living,” says Rey. “Everything in Dubai is so new, so different, with the exotic appeal of the Middle East, along with the glamour of new architecture, and endless fine dining options adding to the mix.”
About how the luxury sector is shaping up in this market and whether it will be a magnet for prospective buyers from outside, she says, “Before heading over to Dubai, I had come to understand from the luxury property circuit that 75 per cent of prime real estate buyers in Dubai are ultra wealthy individuals living outside of the region. In fact, Dubai ranks the most popular city for second home purchases among global UHNWIs. And after my visit, I can see why — the luxury properties in the emirate are exceptional in terms of location, architectural design, finishings, and more.”
She says real estate has always been on the upswing, except for the 2008 economic global downturn, and notwithstanding the crazy gyrations in the world’s stock markets. “Hopefully we have leaderships around the world who have learnt from the 2008 experience and who are now more methodical in framing policies and scrupulous in curbing irrational speculation.”
She cites the report by UK consultancy Savills released the day Cityscape Global opened on September 8 that ranks the UAE second among global peers and being ripe for investments. The report places UAE just behind the US and ahead of Singapore, the UK and Spain in the rankings.
Of the four parameters that Savills bases its rankings on, the UAE does well on three — current population size (inching closer to 10 million) and projected growth, wealth creation (GDP per head) and economic growth.
One of the trends in luxury real estate right now is to invest in destinations popular with tourists. Not only is Dubai quite the tourist hotspot, but also with the World Expo coming to the emirate in 2020, the city will see an increase in the volume of tourists as well as the demand for luxury properties. Dubai is a business and investor-friendly commercial hub and a tax-free haven, and its lifestyle appeals to UHNWIs across the board.
Rey sees foreign investment in the luxury sector here growing. “There are many high-net-worth investors who are buying multiple homes around the world,” she says. “With cosmopolitan tastes and lifestyles, these individuals can opt to choose from around the world. For an overseas investor opting Dubai for their second or third home, income from rental yield for at least part of the year, when it is unoccupied should be encouraged. Any policies that restrict rental will affect their sales. At the same time, the authorities have to restrict speculation.”
She brushes aside fears that the rise of online property buying will ultimately creep into luxury property sector. “In my experience, when ultra wealthy individuals are about to invest millions of dollars in a property, they want a broker involved,” she says, and explains that experienced brokers can provide these buyers with accurate market values of properties so that they do not end up paying anything over and above that price.
“Overseas investors especially prefer brokers to be involved as they can navigate the procedures in foreign markets with relative ease. I would say the trend of online property buying is not really creeping into the luxury property sector yet.”
Source: NP Krishna Kumar, Special to Property Weekly