Buy real estate in Dubai now, or forever be remorseful
Property buying in the UAE is attractive if you have money.
And if you have money, buy now, or else you’re sure to need more of it in the near future.
“With Dubai home prices at around three-year lows and expected to rise ahead of Expo 2020, now could be the ideal moment to get onto the UAE property ladder,” said a recent study by Property Finder, a real estate platform.
The Expo, which will open on October 20, 2020 until April 2021, is set to attract 25 million visitors; 70 per cent of whom are expected to come from outside the UAE. This will be the largest number of international visitors in the 166-year history of world expos.
Meanwhile, a study by the Oxford Business Group, states that the Expo 2020 event to be held in Dubai will further feed appetite for real estate, pushing up prices and boosting returns for developers with existing stock.
“We expect the transaction activity to maintain pace and accelerate as we approach Expo 2020,” the study quoted Ivana Gazivoda Vucinic, head of advisory and research at Chestertons MENA, as saying.
In fact, the emirate has been ranked for the first time in a list of the top 30 global cities with the most significant commercial real estate markets, according to the property consultancy JLL.
Ranking in the 27th place out of the 300 cities surveyed, Dubai’s moved from the 36th place in 2014 highlighting the city’s efforts to boost corporate attraction ahead of Expo 2020, according to the report.
“Dubai may have a relatively low population in comparison to other cities globally, around 2.5 million, but has long punched above its weight,” JLL’s report quoted Craig Plumb, Head of Research MENA, JLL, as saying.
“In doing so, the city has achieved a true global presence and significant influence and this status is confirmed by Dubai’s place in the world’s Top 30 Cities in our latest Global Cities rankings,” he added.
Dubai was the only Middle East city that in JLL’s Top 30 list this year while Cairo was ranked 51st and Muscat 170th.
But how will Dubai’s new ranking and plan to host Expo 2020 impact its property prices?
Commercial property market
The First Group, a developers company in the UAE, cites a report by Knight Frank, global real estate consultants, saying that property prices are expected to increase from mid-2017 as preparations for Expo Dubai are ongoing.
“Government commitment to spending on infrastructure and facilities, along with the realization among developers for the need to phase out projects in line with demand, lead us to believe the real estate market in Dubai has become more mature and resilient,” associate partner at the First Group Dana Salbak was quoted as saying on the company’s website.
“International corporates are also expected to boost their commercial activity, utilizing Dubai as a regional hub, prompting demand for office space and more residential properties”, she added.
There are some weaknesses in this sector.
A recent report by JLL quoted Plumb as saying that Dubai’s commercial sector has “generally underperformed the residential sector over the past year or two.”
And specifically, retail was the weakest, but the coming period is more promising.
“Similar to the office sector, sentiment in the retail market is expected to turn around as preparations gear up for Dubai World Expo 2020.The pressure to complete and hand over projects is expected to intensify in the coming two years, in anticipation of the potential boost to retail spending around Expo 2020,” according to Plumb.
Where does the residential sector stand ahead of Expo 2020?
Residential property market
According to JLL, the residential market saw increased sales.
It quoted data from the Dubai Land Department showing that 5,400 completed residential properties were sold in the first five months of 2017, an increase from the 4,500 units transacted during the same period in 2016.
“Based on the department’s data, total investment in the real estate sector reached AED 58 billion ($15.79 bn) in the first six months of the year. Of this amount, AED28.6bn came from foreign investors, mostly Indian, Pakistani, British, Chinese and Canadian nationals,” it said.
According to JLL, prices may increase over the next 12 months, pending delays to supply completions.
A study by Property Finder reveals experts’ views about the need for Dubai developers to create more affordable housing projects in order for the Expo 2020 to be successful.
It said that Dubai seems to be responsive to the market’s demands it is planning on offering reasonably-priced residential units for expats.