Dubai property: A sound investment

Dubai property: A sound investment

With its strengthening economy and safe haven status, investing in Dubai makes good business sense. As the emirate’s real estate market is going from strength to strength, now could be the perfect time to take that first step onto the property ladder.

Recently, residential and commercial property consultancy Knight Frank identified Dubai’s real estate market as the world’s hottest, with its pace of growth unrivalled by 53 other regions from across the globe. The firm’s latest Global House Price Index revealed that the emirate had achieved annual growth of 27.7 per cent, which is miles ahead of the 17.5 per cent attained by nearest rival China.

The growth achieved by Dubai’s property market is being spurred on by the region’s safe haven status, according to the chief executive of Emirates NBD, one of the emirate's largest banks. He said: “The UAE is seen as a very stable economy, well governed, well managed and secure, and we have attracted investments from Syria and Iraq because of it.”

He believes that this perception of the UAE and Dubai will continue to draw investors to the region, allowing them to take advantage of areas of the property market that are booming, such as the hospitality industry and residential sector.

The latest Dubai Real Estate Market Overview from Jones Lang LaSalle (JLL) details the areas of the emirate’s property market that have performed particularly well during the third quarter of 2014.

Office property

According to JLL’s report, prime central business district (CBD) rents have remained stable over the last three months, but are expected to rise as demand for Grade A office space continues to be strong. The firm also found that properties with excellent access and parking are doing particularly well.

In addition, rates in Dubai International Financial Centre buildings remain high, leading to a spillover in demand to areas outside of this free zone that can offer high-quality units for lower prices - a very attractive combination for potential tenants.

Residential market

Dubai property values have continued to grow over the last quarter, along with rent revenues for landlords. Average rents and sales grew by two per cent and one per cent respectively over the course of the last three months, leading to a period of stability. JLL expect rents and prices to remain relatively steady for the rest of the year, with the market “behaving in a more sustainable and healthy manner”.

In addition, figures from The First Group (TFG) reveal the growing popularity of the residential market, with developments managed by TFG Asset Management running with occupancies nearing 100 per cent and rentals continuing to maintain a strong upward trajectory.

Hotel market

The year ending in August 2014 saw hotel occupancy and average daily room rates maintaining solid rates of growth, according to the report from JLL. The firm predicts that the sector will continue to perform well for the rest of the year, with Dubai positioning itself as a leading tourist destination.

As the Department of Tourism and Commerce Marketing comes up with more innovative ways to boost visitor numbers to 20 million every year by 2020, the hotel industry will continue to reap the rewards of these increased efforts.

Retail market

Many exciting projects were announced during the last quarter, such as the record-breaking Mall of the World, which will boost the sector upon completion. The last three months also saw developers shifting their focus to communities, wishing to draw the attention of residents, which will increase revenues.

JLL added that while the majority of the sector is not expected to enter the pipeline until at least 2017, the market will witness more stock over the next two years.

Posted by Neil King

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