Survey: GCC HNWIs prefer to invest in Dubai property
Dubai, Abu Dhabi and Sharjah have been ranked as the region’s most popular investment destinations among GCC’s high-net-worth individuals (HNWI), a new survey reveals.
The second part of The Middle East Private Capital Survey 2016, a series that focuses on the Middle East investors’ property ventures regionally and internationally, has been carried out by international property consultants Cluttons and global market research agency YouGov.
The survey found that 27 per cent of GCC’s HNWIs who are looking to invest in real estate in 2016 identified Dubai as one of their top three preferred destinations for investments within the GCC.
Meanwhile, 21 per cent chose the UAE’s capital of Abu Dhabi and eight per cent chose the emirate of Sharjah.
“The oil price decline has certainly put budgets under pressure and has triggered a number of macro policy amendments, including the phasing out of energy subsidies an introduction of VAT,” senior partner at Cluttons, Steven Morgan, said.
“We expect these measures to put a clear squeeze on household finances, but, for now the investment sentiment of the region’s high-net-worth individuals remains positive, particularly towards the UAE,” he added, noting that, to many, the UAE symbolises a “regional investment safe haven.”
Recently, the bulk of real estate investments in Dubai had come from within the region, mainly from other GCC countries. Dubai Land Department data stated that GCC nationals invested a total of AED44 billion in the emirate’s real estate in 2015, making them the largest source market of foreign investment in the city’s property market.
Although Dubai’s real estate market was strongly hit during and after the 2008 global financial crisis, which boiled down to the bursting of what was referred to as a property bubble, investors, mainly those from within the GCC, seem to have recently regained their confidence in the emirate.
Faisal Durrani, head of research at Cluttons, explained that the reason behind this confidence was primarily due to the variety of investment options found in Dubai, which 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 per cent to 9 per cent.”
“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,” Durrani added.
It is important to note that the survey focused on HNWIs from the GCC who have, or are looking to, invest a minimum of $1 million in property outside their country.
Part three of the Cluttons’ Middle East Private Vapital Report series will focus on the GCC HNWIs’ global property investments.