A glimpse on the cautious optimism at London fair

A glimpse on the cautious optimism at London fairImage Credit: Simrat Ghuman

The recent Dubai Property Show in London revealed three things British real estate investors like most about Dubai: the relative affordability of property, higher return on investment (ROI) and the absence of taxes, stamp duty and red tape.

With more than 60 exhibitors showcasing thousands of properties at Olympia London, the show attracted more than 6,000 visitors during its three-day run from February 27 to March 1, according to the organiser Sumansa Exhibitions. Visitors aged from 25 to 74 came from myriad backgrounds and locations in the UK, confirming the curiosity and hunger for Dubai's property among Britons, who are among the emirate's top property investors with Dh9.31 billion in investments last year. Sunil Jaiswal, President of Sumansa Exhibitions, earlier told Property Weekly the show could facilitate transactions worth around Dh300 million, but no official figures were available at the time of going to press.

''The first-ever Dubai Property Show was a huge success,'' Jaiswal said in a statement. ''Lots of properties were sold and it was as if people were waiting to put their money on Dubai real estate. The overall feedback from visitors and exhibitors has been amazing.''

The positive buzz was palpable among the visitors Property Weekly spoke to. Houman Hedjaz, an Iranian orthodontist based in London and a veteran investor with properties in London, Iran and Dubai, said the ease of transacting in the emirate has been a big draw for him. He explained how an ''outsider'' like him needed only two weeks to purchase a property in Dubai, while in London, despite being a cash buyer, it took him nearly six months to complete one transaction.

Others might say he was unlucky, but Hedjaz rattled off a host of other reasons for wanting to buy a second property in the emirate this year. ''A rental [property] in Dubai will give me 6-7 per cent return, tax free, whereas a London rental will only yield 2-3 per cent,'' he said.

''I'm looking at both Paris and Dubai. Paris might have more charm, but the buildings are old and the laws are pro-tenant. If you get bad tenants who don't pay, it's a nightmare because you can't [drive] them out.'' Dubai, he added, is more attractive because the properties are new and maintenance cost is low, while its laws make tenancy issues ''much less [of a] hassle for me''.

Attractive prospects

Value for money is a major driver for investors who fall in love with Dubai. While London properties, as a rule of thumb, double in value every seven years, those in the rest of the UK are significantly subdued, yielding meager returns. A recent Nationwide Building Society report states that London property prices were 20 per cent higher than their pre-crash peak in 2007, while areas in outer London, especially in the southeast, rose between 2 per cent and 5 per cent. Prices in all other regions in the UK remained well below their 2007 values.

What this amounts to is that buying outside London will not move the needle on investment returns, while buying in London is virtually impossible for low- and mid income buyers, given that a 420-sq-ft dilapidated garage in Kensington went on the market in December for a mind-boggling £650,000 (Dh3.66 million).

It's hardly surprising that even people who do not own property in the UK are looking at Dubai as a way of getting a foothold in real estate. Harry Darke, an investment manager with Architas, AXA Wealth's specialist investment arm, visited Dubai for the first time last month and was immediately taken by its combination of sunshine, lifestyle and absence of taxes. Looking for a buy to-let property, he said, ''I'd like a studio or one-bedroom flat in Dubai. I'd love to live there but to start off I'll rent it out. Now I have to get a 40 per cent down payment.''

It's a similar story with Justin Swanley who visited Dubai for the first time in January and heard about the London show on the radio. At the event, Swanley told Property Weekly, ''People here are saying that I can get a return of up to 12 per cent on a one-bedroom or studio unit, but I'm going to meet a lot more exhibitors and do more research. It's something I'm looking into very seriously.''

Some, however, were a little sceptical about the risk of oversupply in the emirate. Riz Khan, a senior executive at IBM who has built a property portfolio over the past decade, said, ''Compared to ten years ago, the growth is slower but Dubai still has a lot of potential. But with so much construction going on, I'm worried about what will happen in case there's another economic scare, or whether these units will be occupied after the World Expo 2020.''

The exhibition attracted buyers as young as 25-year old Dayo Coker, who is eager to kick-start his portfolio — his family owns properties in Los Angeles and New York in the US. While banking executive Asim Tufail, 28, who owns property outside London, says Dubai seems the most attractive location to expand his portfolio. British-Italian Antonio Deblasi, 74, stopped by to look at retirement options in sunny Dubai. They wanted to find out how far their money would go and what financing options are available.

However, some exhibitors were disappointed with the footfall. Qasim Riaz, Managing Director of Limitless, a master developer, told Property Weekly, ''We have the best payment plan on the floor today but we're not seeing the numbers we were promised. I'd say we've spent Dh100,000 for this trip, not [counting] accommodation, and it has definitely not been worth it.''

Great deals

Riaz's comments are in sharp contrast to what others have to say. Luxury property developer Al Barari, whose new high-end projects are most likely out of reach of the average London investor, is one of those who describe the event as a success. Dereck Hoogenkamp, Sales and Marketing Director of Al Barari, says he spent the week meeting clients and presenting the projects and investment options to prospective buyers.

Fakhreddin Mohammad, Chairman of Emirates Privilege Investment and Director of Texture Group, which paid Dh1 million as the gold sponsor of the show, says the event provided a platform to expand his company's network in London. ''I won't [recoup] all the money, but meeting people face-to-face has been invaluable. New buyers are curious, but don't have enough information about Dubai, how we do things, what's on offer, etc. Property is never going to go out of fashion and we have the magic of currency on our side — £20,000 or £200,000 translates to much more in dirhams and that makes buyers really optimistic.''

Saleh Tabakh, CEO of Delta International Real Estates, says his firm concluded deals worth between £4 million and £5 million. He also had to extend his stay in London to follow up on negotiations initiated at the exhibition. ''We came prepared for the British buyer, who is treating Dubai property as a virtual asset,'' says Tabakh. ''The buyer might never even see the property; all that he or she is interested in is the ROI. I have 120-page books of statistics, facts and figures on the Dubai real estate market that I gave to all my visitors, rather than [giving] brochures or chatting about aesthetics as some of the other exhibitors did.

''If they had questions about regulations, I just took them to meet the people from the Dubai Land Department [DLD] so they could be reassured.''

After the show, Tabakh adds, he proposed to the DLD to allow title deeds to be signed on the spot at next year's event.

A success

Being the first Dubai focused exhibition in London, it seems to have been a success, with enthusiastic exhibitors offering exclusive promotions, including free tickets to Dubai for buyers, apartments released only for London visitors and special discounts for booking units. The busiest stand belonged to Emaar. In a statement, Ibrahim Abdullah, Head of Sales — International at Emaar Properties, said London has always been a target market for the company. ''The participation at the show was really successful and we had some good transactions on the first day itself.''

The exhibition also featured seminars, which provided information about real estate investment in Dubai. Topics ranged from property laws to financial solutions for potential investors.

Find out why Dubai is still favoured by ultra-rich as city to be in

Source: Simrat Ghuman, Special to Property Weekly

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