Increasing investment in Dubai real estate

Tuesday, August 25, 2015

Increasing investment in Dubai real estate

 

As of the first quarter of this year, buyers from 123 nationalities poured billions of dirhams into the Dubai real estate market. Since 2002, when the first Freehold Law was passed, real estate Dubai has seen tremendous growth, offering foreign investors the opportunity to purchase Dubai real estate.

 

Off late, Dubai has reduced its reliance on oil revenues. Therefore, the impact of lower global oil prices on the emirate’s economy is not likely to be significant. The UAE also benefits from its strategic geographical location, attractive business environment, Free Zone incentives and favourable tax frameworks for multinational corporations. 

 

As for the residential market, increased regulation of the Dubai real estate market is adding much-needed stability and limiting speculators who were responsible for the property boom and bust back in 2008. Secondly, diversification of the UAE’s economy, increasing population, tourism growth and winning of the Expo 2020 bid is expected to continue to position Dubai as a leading global commerce hub. 

 

Emerging areas such as Dubailand are offering healthy rental yields and capital growth for investors, thus facilitating stronger interest amongst buyers in real estate Dubai. Not just this; by international standards, Dubai real estate, especially the residential property market, is relatively inexpensive. This, in addition to the fact that the UAE economy is growing strongly, suggests that real estate Dubai will see ongoing expansion despite recent market controls such as the doubling of transfer fees and mortgage caps.

 

Whilst the Dubai real estate market is enjoying a phase of stability and regulation like never before, studies have shown that the market has undergone a slowdown since the start of the year, with dipping residential real estate Dubai property prices and transaction volumes expected to remain subdued this year. However, experts state no reason for concern for long-term real estate Dubai investors, as the softening of prices will alleviate potential overheating and give the market time to absorb existing supply. After all, nobody wants a situation where prices remain high at a level that demand may not pick up to the extent necessary. So, after strong growth numbers seen in 2014, this is an opportunity for healthy and positive adjustment for the market. In fact, a healthy softening will also give renewed confidence to long-term investors that real estate Dubai has matured. Additionally, experts are confident that the Dubai real estate market, particularly residential sales, will bounce back in 2016. 

 

Whilst prices are estimated to fall by up to 15 percent this year, a less volatile Dubai real estate market will be beneficial for all stakeholders and help developers plan projects in line with real demand. Furthermore, the Dubai government’s plan to upgrade the city for Expo 2020 through infrastructure spending and driving foreign capital in myriad sectors will provide support over the next five years.

 

Moreover, Dubai’s gearing up for Expo 2020. With more than 25 million visitors, AED 25 billion in total investment in infrastructure-related projects and over 270,000 new jobs expected to be created in time for the much-anticipated event, the future for real estate Dubai looks brighter than ever before. 

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