A weakening rouble against the US dollar has made Dubai property costlier for Russian investors by almost 60 per cent, according to a report.
In a report titled, ‘Dollar and Sense’, Unitas and Reidin.com said: “At the higher end of the market, which has been historically reliant on foreign inflows, the price of a high-end villa in communities such as Palm Jumeirah, Emirates Hills and Downtown Dubai, prices have appreciated by 60 per cent in the last 12 months in rouble terms even as prices have registered declines of as much as 20 per cent in UAE dirhams.”
Pointing out the long-standing relationship between real-estate price cycles and dollar strength, it said: “In times of weak dollar market, real estate prices have had a greater rates of appreciation, when compared to that of a strong dollar.
“While there have been several factors that contribute to the under/over performance in each of these periods, it is clear that the dollar strength is a major variable in the contribution of returns of the sector.”
Rouble hits six-month low
On Monday, Reuters reported that the rouble had hit a new six-month low against the dollar, hurt by weaker oil prices and reports of an upsurge in fighting in East Ukraine. The currency was 0.7 per cent weaker against the dollar at 65.45.
Russians have been among the top investors in Dubai’s real estate market for several years, having prime investment in upscale locations such as Palm Jumeirah, Dubai Marina and Downtown Dubai.
Though no figures have been released of their investment in the first half of 2015, Dubai Land Department does put them in the list of top 10 nationalities investing in the emirate.
The total foreign investment (excluding GCC investment) in the sector is almost Dh30 billion in the first half. Indians were ranked first with investments worth Dh7.8 billion followed by British investors with Dh4.7 billion and Pakistani investors who bought properties worth Dh3.3 billion.
“The number of enquiries from Russian are much less than before driven by rouble and oil price weakening,” Kalpesh Sampat, director at SPF Realty told Emirates 24|7.
The report points out that though Dubai real estate prices continue to trend lower, investors whose base currency has not been the US dollar are still enjoying healthy returns.
Based on analysis of several global real estate markets (United States, United Kingdom, France and Singapore) against Dubai since the inception of freehold in 2002, the report reveals Dubai has been the best performer.
“However, in the last 12 months prices across several real estate markets have begun to trend downwards in response to USD strength. We opine that this trend will continue for the foreseeable period,” it added.