Why world’s wealthy want slice of Dubai

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Dubai, Abu Dhabi and Sharjah have emerged as the region’s most popular investment destinations amongst the GCC’s wealthy, according to a new report.

More than half the GCC’s wealthy individuals want to invest in a property in one of the three UAE cities, says the survey by Cluttons, a real estate consultancy.

Cluttons’ 2016 Middle East Private Capital Survey Part 2, in partnership with YouGov, shows that of those surveyed, more than a quarter (27 per cent) identified Dubai in their top three destinations within the GCC, while 21 per cent chose Abu Dhabi and 8 per cent selected Sharjah.

The reasons why the region’s wealthy choose to invest in the UAE cities are clear – investments in the UAE are both safe as well as offer attractive returns.

“The investment sentiment of the region’s High Net Worth Individuals remains positive, particularly towards the UAE which is seen as somewhat of a regional investment safe haven,” said Steven Morgan, Senior Partner at Cluttons.

The survey investigates investment trends and behaviours of the GCC High Net Worth Individuals who either have made or intend to make an investment of $1 million or more in international property.

According to data from the Dubai Land Department, GCC nationals were the largest investors in Dubai real estate in 2015, with a total of Dh44 billion being committed over the course of the year.

The strength of GCC investment into Dubai real estate over 2015 demonstrates the continued desirability of the emirate as an investment location and the most sought after investment destination in the region.

= Why Dubai: 1001 reasons =

Dubai emerged as the most preferred location for real estate investment in the Middle East during 2016, based on the findings of Cluttons’ latest research.

In addition, Dubai in particular offers a wide range of property investment options – from the very affordable right to one of the most exclusive addresses in the world.

“The variety of investment options available in Dubai range from low-end, high yielding residential units in peripheral schemes such as International City and Discovery Gardens, to more sophisticated investment options in the office market, where yields can range from 6.5 to 9 per cent,” said Faisal Durrani, Head of Research at Cluttons.

“We’re also witnessing the emergence of worker accommodation as an increasingly popular asset class, which can offer yields of between 10 and 20 per cent,” he said.

The majority of respondents to Cluttons’ survey indicated that they were unsure of which specific area in Dubai they would target for an investment. However, for those who did name specific locations, for residential investment, The Springs and Bur Dubai were the most mentioned areas, followed by Deira, Jumeirah Islands and Jumeirah Village.

For the office asset class, Deira and Downtown Dubai are most popular, with Bur Dubai and Business Bay coming in joint second.

Emirates 24|7 reported in February that Dubai property process remain firm despite the slump in oil price earlier this year.

Read: 5 reasons Dubai property prices aren't falling this time http://www.emirates247.com/news/emirates/5-reasons-dubai-property-prices-aren-t-falling-this-time-2016-02-15-1.620971

Investment sentiment in the UAE, especially in Dubai property, remains robust and residential prices are holding up much better this time despite the global oil price halving since June 2014.

It’s market fundamentals coupled with a prudent regulatory environment that have managed to support the property sector this time, analysts and market experts have said.

“While oil prices remain well below the long-term average, which is clearly having an effect on market confidence, Dubai’s improved regulatory environment, broader investor profile, and increased maturity are all indicators that its real estate market should eventually self-correct,” Sidharth Mehta, Partner and Head of Building, Construction and Real Estate with KPMG Lower Gulf, had then said.

The factors that are keeping Dubai’s property prices resurgent include a well-diversified economy, prudent regulatory environment, stable confidence levels and realistic rentals.

= Expo 2020 Bonanza =

In addition, with Dubai gearing up to host Expo 2020 in about four year’s time, the emirate will see 25 million additional visitors for the six-month event.

This requires the city to keep infrastructure spending at an even keel for the thousands of additional hotel rooms required, not to mention the road and metro connectivity and retail options.

“When preparation for Expo 2020 picks up, we expect to see a significant amount of job creation and an increase in demand for residential real estate,” KPMG’s Mehta said in February.

The KPMG report also clarified that there remains ample demand for quality properties. “As supply and demand are not currently balanced, certain areas and segments are significantly more attractive than others – with a premium for quality,” the report had then said.

= ABU DHABI SURGING =

The UAE capital offers unique investment opportunities to savvy investors. “Lower prices in Abu Dhabi’s real estate market compared to Dubai is one of the main drivers for investment in the UAE’s capital,” Clutton’s Durrani said.

“The price-points for certain types of property are lower than comparable options in Dubai, which gives those who have been priced out of the Dubai market a chance to invest in similar stock. On Saadiyat Island, for instance, where average values for sea view villas currently sit at circa $610 psf, the best comparable Dubai equivalent would be villas on the Palm Jumeirah, which are considerably more expensive at $780 psf”.

= EMERGING SHARJAH =

Sharjah’s high ranking in Cluttons’ survey can be attributed in part to the emergence of the emirate’s first master planned communities, which have been very well received by the local and international investment community.

Morgan explained: “The rise in demand for gated community living has ensured that schemes like Al Zahia and Tilal City continue to register strong interest. At Tilal City, more than 1,800 plots of land have been made available on a freehold basis and the appetite from regional investors has been extremely strong”.

= REGIONAL CITYSCAPE =

The survey said that 6 in 10 respondents (63 per cent) plan to invest in their preferred real estate locations during 2016.

Elsewhere in the region, the survey shows that 63 per cent of wealthy investors in both Muscat and Manama are likely to invest in their preferred locations in 2016, while 65 per cent of investors in the remaining GCC countries (Kuwait, Qatar and Saudi Arabia) will target investments in their preferred locations throughout the year.

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