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
Imran Farooq, CEO of Samana Developers, revealed that the appreciation of Dubai real estate had been on a record 300 per cent level during the run up to the Expo. On the other hand, rental values across the board in A-grade properties had shown an appreciation of 100 per cent.
Citing research by the Dubai Chamber, he said that Expo 2020 helped more than 76 per cent of companies in Dubai in boosting their growth during the six months of the event. The Department of Economy and Tourism quoted that a total of 136,034 business registrations and licensing transactions were completed during the first quarter of 2022, up 36 per cent from the prior-year period when the Expo started.
“Looking at these positive factors, the post Expo boom is here to stay and the outlook is bright,” Farooq said. “More than 24 million Expo 2020 visitors have learned that Dubai offers one of the best lifestyles in the world, with state of the art infrastructure, modern architecture, and tourist attractions. In addition, the UAE’s business-friendly visa regime has encouraged new businesses, especially professional and work-from-home categories.”
He added: “With a very bullish trend in residential properties, and the ease of doing business, market indicators are showing a brighter outlook, which has a great potential to continue considering Dubai’s long-term development plans. I am expecting the market to rise year-on-year in terms of capital growth, FDI to real estate and rental income.”
He also highlighted the demand for real estate investments both in the buyer as well as rental segments. “These real estate transactions are here to stay, as end-users have bought these properties – that means a long stay in Dubai. We have seen that the demand for vacant properties is higher than that of rented ones. We are seeing the market appreciation not only in A-grade properties, but many segments – even the C-grade areas have seen a rental appreciation.”
Not a speculator’s market
Haq is quick to assure investors that fluctuations are normal in every market. “In Dubai, the fluctuations might be big, but the graph has always been on an upwards trend. Nobody that has invested in the last seven years has ever said that they have lost money. The safety that you see in Dubai in the real estate market is genuinely not there anywhere else. In a nutshell, this is a very attractive buyer’s market.”
In the long-term, he expects to see a few people that are strapped for cash making distress sales. “But, we will only see a dip in the market if speculators come in looking to make a quick profit. How Dubai handled the Covid-19 pandemic put the city on the global map, and the proof is when we saw 2021 recording the biggest number of transactions taking place.”
“People realised that this is a safe place to invest, and genuine end-buyers came in,” he explained. “Today, you don’t have many HNWI investors coming in for one or two units; you have people saying that they want entire floors. While we get big upward trends, what we can expect to see in the future is a stabilisation of prices. The only thing we need to worry about is people that are coming in, paying the down payment and two weeks later going out in the market hoping to sell for a premium.”