Future bright and welcoming for UAE real estate

The UAE’s real estate market continues to hold several attractive opportunities, especially for international investors that first arrived in the country for the Expo 2020 Dubai mega event, property experts have said.

Speaking to Khaleej Times, Emad Haq, vice chairman at H&S Real Estate, pointed to the “spillover effect” that the global mega event had created as it firmly put the city, and by extension the UAE, on the world map.

“Something that we already knew, but which the whole world does now is that the UAE, and Dubai specifically, can host major events at the global level,” he said. “The UAE has shown the world that it is in a position right now where it can even host the Olympics. This is the vision that His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai saw back when the property boom came in 2005-2006.”

Haq also noted that many of the visitors were not only here for Expo 2020 Dubai, but were also eager to explore business and investment opportunities. “We saw active investors from regions that we had almost never seen before. They came from places like Austria, Hungary, Colombia Argentina, Mexico, and so on. The came to visit the Expo and while they were visiting they actually thought that this is a great place to invest in, and they actually ended up buying properties over here – such was the confidence that they had in Dubai – and, at the same time, many people thought of setting up businesses over here.”

Haq further noted how impressive it was that Dubai had welcomed around 24.1 million visitors for Expo 2020, especially at a time when many countries were still unsure about the situation with Covid-19. “Let’s assume that you have 24 million people, and that one per cent of these visitors decide to stay and set up shop over here. Even that one per cent will add a lot, as far as the Dubai market is concerned.”

First time buyer preferences

According to Haq, first time visitors, who were looking to buy, invested in properties by developers that are well known internationally such as Emaar, Nakheel, Damac, and Dubai Holding. “However, that is not to say that they only went for these developers. The investments were across the board and in every single category. However, the appreciation and demand was highest for luxury properties. This was an anomaly that we as real estate agents were a bit surprised by.”

“Overall, if you look at prices in Dubai, we saw a jump of 40-60 per cent. In the luxury segment, it went up by almost two or even 2.5 times,” he explained. “I want to stress that the investors that came in were not speculators; these are not people that want to flip for a quick profit after some time. There is a speculative market, which is not a stable market, and then there are those that are end-buyers with deep pockets. These were the buyers that we saw here.”

Dubai, he added, has always been seen as a destination where your investment was safe, and which promised you a good rental return. “It is one of the only places in the word where you get a rental return of anything between 4.5 to nine per cent. Whereas on a good day, somewhere else in the world, you will get 3.5 to four per cent. Your money is safe, it is pegged to the dollar, so you know that there is no currency fluctuation.”

A very attractive buyer’s market

Like Haq, Farooq Syed, CEO of Springfield Properties, believes that the expert handling of the challenges of the pandemic distinguished Dubai from other global destinations. “The fact that Dubai hosted such a mega event in a time where most of the world was still recovering from the aftermath of Covid-19 really showed the commitment this city has to overcome any challenge, and it’s passion for growth and business. While most global events were cancelled, Dubai clocked in 24 million visitors to its Expo pavilions, displaying its flexibility and cementing its position as a business leader in the global community.”

“Moreover, the booming real estate market attracted investment from many of the Expo visitors, and we at Springfield had seen many first time buyers purchasing investment properties in Dubai,” he added.

Dubai’s market, he noted, still holds many opportunities. “I believe that, with the plans which the leadership has for the future growth of business and industry, we will attract more people to make Dubai their home. With this increase in population, I expect a further growth in housing demand in the coming years, bringing healthy yields to investors.”

Compared to major metropolitan cities around the world, Dubai’s real estate is still grossly undervalued, Syed feels. “One of the reasons for this has been lower cost labor and building materials. However, costs are going up around the world and developers in Dubai will not be able to provide the same prices in the future, pushing the cost of property replacement up. With this, and the population increase expected, I am quite positive that property prices will go up in the coming few years.”

Post-Expo 2020 boom here to stay

rohma@khaleejtimes