Investors are upbeat on UAE real estate as demand for residential and commercial space is expected to remain strong in the coming years with new projects coming into the market, according to new reports.
Leading fund managers, property consultants and executives said demand for real estate projects will increase as the economy improves, population figures rise and tourism increases.
Al Masah Capital, an alternative asset manager, said Dubai’s real estate market is ripe for investment as it enjoyed good growth in the residential and hospitality segments last year.
“Residential development continued to remain high in Dubai on higher sales prices, while the hospitality segment remained robust through the year with a rise in daily and occupancy rates,” the Cayman Islands-based company with an office in Dubai said in its Mena – Alternative Investment Strategy 2013 report.
In another report, Business Monitor International, or BMI, said government-backed investments, especially in transport infrastructure, will support the UAE’s real estate sector as well as the construction sector. In its first-quarter report on UAE real estate, BMI said a clear regulatory environment and governing of private investments in real estate create a favourable investment climate.
“The UAE benefits from its strategic importance in the GCC and of the strategic importance of the region to the world. Regional unrest has benefited the emirates as they are seen as much safer than their neighbours,” the BMI report said.
Referring to a recent survey conducted by real estate consultants Cluttons placing Dubai as the most attractive destination to most private investors, Al Masah Capital’s report said the real estate market in Dubai is to be driven mainly by residential and hospitality segments in 2013. Recent projects, launched by major property developers including Emaar and Damac, sold out on its launch days, indicating the recovery in the sector. Damac managing director Ziad El Chaar said Dubai’s real estate sector recorded around 10 per cent growth in 2012 and this is likely to further accelerate this year.
Michael Lahyani, founder and chief executive of leading UAE portal propertyfinder.ae, expressed similar views and said the real estate sector has witnessed a strong start in first quarter of this year.
“The strengthening fiscal environment in Europe, along with the political instability in the Middle East is pushing more and more people towards Dubai, renowned for its tax haven and secure environment,” he said.
“Dubai continues to lead the way, with ever popular locations such as Dubai Marina, Downtown Dubai and Palm Jumeirah being joined by relatively new developments like Jumeirah Village Circle. The outlook for the rest of the year remains positive with demand is expected to remain strong with new projects coming on to the market,” Lahyani told Khaleej Times.
Shailesh Dash, chief executive of Al Masah Capital, said projects like Mohammed bin Rashid City show that Dubai has recovered its swagger and the renowned confidence allows for them to start dreaming again. “We do believe that the implementation of these new projects will be done according to the demands of the market as well as the prevailing credit and cash conditions which are far different from 2007.”
The BMI report also cautioned that limited supply of credit affects project finance. “Our core view for the UAE is that the economy and real estate sector will experience relatively moderate levels of growth over the coming decade,” it said.