Foreign investment in Dubai’s real estate market has jumped by almost 500 per cent over the past year, according to a senior official from the Land Department.
From a total investment in the industry of Dh39.707 billion to date in 2007, foreigners bought 57 per cent of that value, or Dh22.931bn. By comparison, in 2006 foreign investment totalled Dh6.788bn.
Overall, foreign establishment, including individuals and investment funds, have conducted 473 purchase transactions from the beginning of the year until yesterday, said Mohammed Thani, deputy director of the Land Department.
“This massive increase shows the high confidence in the market,” he said.
Investments in the Dubai market from people in Gulf countries have increased by 40 per cent in the period and Thani said many of the properties are being held mainly for re-sale purposes. And Thani believes most of the properties are being held for resale. “GCC investments amounted to Dh2.078bn this year up to yesterday compared to Dh1.484bn last year,” he told Emirates Business 24|7.
He said the price of real estate had gone up from an average of Dh600 per square foot to as high as Dh1,600 per sq foot. The top end of the Dubai market has seen floor space selling at as high as Dh12,000 per sq foot.
Saudis topped the list of GCC investors at Dh810 million for the year to date, which is a large increase from the Dh461 million they invested in 2006.
However, the largest rate of increase in investments in the emirate by GCC nationals belonged to Kuwaitis. They were the second largest group of GCC investors so far this year – pumping Dh627m into the property market, compared to just Dh106m in 2006.
On the other hand, Omani investments fell by 67 per cent to Dh142.6m compared to Dh438m last year. A leading investor from Oman told Emirates Business 24|7 that offshore projects in Oman are giving good returns, leading to a decline in investments in Dubai. Investments closer to home also add to the comfort level, he asserted his point. GCC investors preferred commercial plots to residential plots and so far this year they have purchased 147 commercial assets and 116 residential, compared to 93 commercial and 79 residential in 2006.
Thani added that the outlook for property investors in Dubai remained bright and he expected to see continued interest from the region in the emirate’s market.
“The demand on land and real estate properties and projects in Dubai has increased sharply in the past few years and this has pushed prices up. Three years ago, Dubai’s real estate market became a sellers’ market and they are the ones who control prices.
“The market is very strong, and nothing will affect it except for a direct economic crises. Even the recent collapse of stock market did not affect the real estate market at all.”
Confidence has also been boosted by legal measures to protect investors.