As the Dubai Property Market continues to go from strength to strength, we take a look at the top five reasons why Real Estate in the UAE is seeing a powerful resurgence.
Following the correction in prices back in 2008, the market has slowly improved with 2012 seeing the most impressive growth – around 10-12% in some of the more desirable areas according to recent reports.
There remains a great deal of growth still to come as infrastructure is completed and the influx of foreign investment and foreign workers drives the market.
1. Increased Liquidity
The Dubai economy remains on a strong recovery path with Gross Domestic Product projected to grow by 4.5% in 2012. This performance is being driven by the strong growth of key sectors such as tourism, commerce, retail, hospitality and logistics.
Banks are now providing funding again – not just for investors in the form of mortgages as low as 3.99% – but also to contractors and developers.
As developers receive funding as well as deposits and further payments on projects they will be able to continue building at pace. Liquidity is the key driver of the Dubai Property market and the banks need to continue to make funding available at all levels to ensure that the current recovery remains on track, at a steady pace.
2. Comprehensive infrastructure investment
The Dubai Government is again investing heavily in an infrastructure programme, with Dubai World Central spending US$ 4.6 billion on infrastructure alone and terminal two of Jebel Ali Port passed halfway and set for completion next year.
As road networks, schools, hospitals and shopping malls also complete in the new areas of Dubai, investment in the real estate projects will continue to come in. There are many good prices to be achieved in the less developed areas of Dubai which are certain to grow in the coming years as the infrastructure network is finished.
3. New Job Creation
Nearly one million new jobs are expected to be created before the end of 2020 according to the Dubai Government. As Dubai continues to grow and generate new opportunities, the demand for quality housing will remain. Jones Lang La Salle predicts that around 50,000 additional residential units are expected to be delivered by 2014.
With Europe and America still feeling the effects of a global recession, many ex-pats are looking to Dubai as a place to extend their career opportunities.
According to Hasnain Qazi, Middle East Business Manager at Huxley Associates, “Dubai has evolved into a lifestyle destination of choice for people all over the world looking for a safe, secure, vibrant, cosmopolitan city to live in, providing tax free income and a high standard of living. This is quite a contrast to many other countries in the world where economic and social conditions are not as rosy.”
4. Transparency and regulation
The Real Estate Regulatory Agency (RERA) is launching a new service fees index in this month which aims at regulating service fees, reducing disputes about service charges and increasing transparency in the market.
Following the release of the draft investor protection law in Q2, the Dubai Land Department has released a draft Code of Corporate Governance for Developers. The Code defines the responsibilities of developers and requires them to disclose to investors complete information about their properties, including alternatives in case of potential delays. The Code’s ultimate goal is ensuring more transparency and better regulation of the real estate market.
Further regulations ensure that all lease contracts are registered through a government database and all transactions with the Land Department go through a centralised listing site for available property, all of which prompted DAMAC Properties to recently call Dubai’s property market as one of the most regulated in the world.
“DAMAC Properties welcomes recent moves by the Dubai government to tighten regulation in the property market which we believe will sort out the wheat from the chaff,” said Niall McLoughlin, Senior Vice President, DAMAC Properties. “As the market in Dubai recovers strongly, it is important to have clear legislation which will instill confidence in overseas investors in particular.”
Investors believe in the Dubai Property market again. Government, banks and developers have worked hard over the past few years to bring back the belief in the growth potential of the market. Cityscape Global this year was a case in point with companies talking confidently about the prospects for the future and bringing back projects which had previously been shelved.
All markets, both financial and real estate are driven by consumer confidence and a return to the belief that Dubai is a thriving international hub will see clients returning in big numbers.
What do you think of our top five list? What have we missed? We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest