Back
during the financial crisis, if looked like Dubai might be in trouble. The city
built on luxury living and Middle Eastern business travel seemed out of step
with the new economic reality, and questions were being raised about its very
future.
Fast
forward five years, and it seems that the naysayers got it wrong. Dubai is
firmly back in the saddle, with a GDP that is running at a healthy 4.4%. The
real estate market in Dubai is similarly heating up, providing significant
opportunities for investors.
According
to Jones Lang LaSalle, a large financial and professional services firm that
specializes in commercial real estate and investment management, "The
Dubai real estate market continues to improve with all sectors in a recovery
phase. The strongest performance in the office sector remains concentrated in
the best quality projects in prime locations. The residential and retail
markets are witnessing a more broad-based recovery while the hotel sector has
maintained its strong growth and industrial continues to expand."
In
the residential market, Q2 2013 saw strong growth, with sales of villas such as
those in Jumeirah Islands rising in price by 12% year-over-year, and apartments
rising by a very strong 17%. Rental prices were also up, with villas coming in
at 13% growth, and apartments at 12%. However, despite the rise, prices are
still 17% to 19% less than they were when the market hit its peak in 2008,
indicating that there is plenty of room for them to rise further – which is
good news for potential investors. To get a feel for what types of residential property
are available for investment in Dubai, take a look at emiratespropertyshop.com.
If
you are thinking about investing in office space in Dubai, then there is good
news as well. The return to economic growth has driven a corresponding surge in
the commercial market, with buildings seeing rents rise 8% on average for prime
real estate. In general, growth is best for quality buildings in desirable
locations, such as the Business Bay and Jebel Ali. There has also been a trend
of increasing investment from China and India, further adding to the upwards
pressure on the market.
Industrial
units are also doing well, with the market showing greater stability and
resilience than other countries in the Middle East and North Africa. With
approximately 66 million square meters of space available today, primarily
devoted to logistics and light industries, and further large amounts of land
set aside for new industrial areas, this sector is likely to continue expanding
and offering investment opportunities for the foreseeable future.
Rounding
out the picture, hotel and mall space has remained relatively static, with no
new mall completions and only one new hotel built in the last 12 months –
although several new facilities are expected to be completedin the next year.
Tourist volumes increased at an annual rate of 9% in 2012, and hotel occupancy
rates were up as well. While investing in hotels in Dubai is primarily for
large institutional investors, it is interesting to note that there is an
increasing trend to convert office units to hotels, perhaps providing an
opportunity for mid-tier investors.
