DIFC realty second only to London’s West End
Dubai’s real estate sector will face continual property price rises this year with rents at the Dubai International Financial Centre set to be second only to the West End of London, according to new predictions.
The emirate is just an example of the persistent skyrocketing property prices and rents occurring throughout the GCC, as forecast by real estate services firm Jones Lang LaSalle yesterday.
“Pent-up demand, increasing costs and delivery delays will contribute to price rises of between 10 and 20 per cent in the most established markets of the UAE, and elsewhere in the region we see even greater potential. Dubai now has some of the most expensive real estate in the world,” said Blair Hagkull, Jones Lang LaSalle’s Mena Managing Director.
The firm added that 2008 will be the year when a “flight to quality” occurs in all sectors of the real estate market creating what it calls a two-tier market.
“When demand outstrips supply, people will buy what is available.
When there is a choice, quality counts,” Hagkull said.
“By ‘quality’ we do not necessarily mean ‘luxury’ but it does mean quality of location and position, quality of brand, quality of finish, and quality of service.”
Hotel occupancy and rates will also continue to rise in the GCC, with Dubai remaining among the top in the world and other GCC markets like Abu Dhabi and Jeddah set to outperform Western markets in this sector, according to the firm.
In its “Top 8 for 2008” predictions for the GCC’s commercial property trends this year, Jones Lang LaSalle projected the region is set to become a global leader in sustainability, with Dubai paving the way in the Gulf.
The property advisory firm also said 2008 will be the year global real estate investors discover the importance of GCC investors and enter the region’s market.
Hagkull predicted several factors that will contribute to the arrival of international investment in the sector, including greater transparency and the resulting decrease in risk perception – the ongoing fall out of the global sub-prime crisis along with improved quality.
Dubai’s transparency index in 2008 is expected to reach the third tier, moving closer to the second-tier states such as Belgium and Germany.
The emirate in 2006 improved its place in Jones Lang LaSalle’s Biennial Transparency Index by reaching the fourth tier, after it was branded along with Saudi Arabia among the poorest regulated markets globally in 2004.
According to the firm, Dubai’s rate of change is unprecedented and other GCC states are expected to follow its development this year.
The firm added that GCC countries will continue their aggressive international investment ventures this year – in light of the current credit crisis coupled with record oil prices – with total value of capital exports from the region to increase by about 50 per cent.
The competitive environment in the region is also set for a boost this year due to the re-development of major GCC cities, Jones Lang LaSalle predicted.
“The freehold revolution started in Dubai in 2000 had a distinct timing advantage and presaged the phenomenal development of the real estate market throughout the region, but for the first time we are seeing the re-development of cities in the GCC, alongside the vast amounts of ‘Greenfield’ or new city development,” Hagkull said.
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