Investors look elsewhere as UAE residential market shows limited growth

Investors look elsewhere as residential market shows limited growthImage Credit: Supplied

The UAE's residential sector is still the most preferred asset class among Middle Eastern investors, however, limited further upside has resulted in a shift to other asset classes, particularly hospitality and offices, according to JLL's 2014 Middle East and North Africa (Mena) Real Estate Investor Sentiment Survey.

According to respondents of the survey, the UAE residential sector is expected to perform less strongly over the next 12 months. On the other hand, investors expressed strong optimism in the performance of hospitality real estate across the UAE, as increasing tourist numbers and the government's commitment to support the sector's growth have lifted investor confidence.

''Although the UAE residential market remains the preferred asset class, investors recognise there is now more limited further upside in this sector and are therefore shifting their attention to other asset classes such as hospitality and offices in the UAE and residential and industrial opportunities in Saudi Arabia,'' said Gaurav Shivpuri, Head of Capital Markets at JLL Mena. ''Other key messages from this year's survey include investors moving up the risk curve as well as emerging interest in North American real estate among Middle Eastern investors.''

The UAE and Saudi Arabia remain the most favoured markets in the Middle East. Political and economic stability and market transparency continue to attract capital inflows to the UAE, as 97 per cent of the survey's respondents said they are keen on investing in the country's real estate sector.

The survey also reveals that investors are willing to buy real estate assets in the UAE on yields below 8 per cent in both the office and residential sectors.

Around 80 per cent of respondents also said they are willing to pay a premium for sustainable realty assets compared to 67 per cent last year. Some 84 per cent of investors would invest because of value considerations and the belief that sustainable buildings generate higher returns.

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Source: Property Weekly


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