Market will pick up pace from 2017; property prices will match Hong Kong and London in future
By Parag Deulgaonkar/ Emirates 24/7
Prices for prime properties in Dubai will match those of Hong Kong and London in coming years, believes a Dubai-based billionaire businessman. “I am still surprised why property prices in Dubai are still far lower than Hong Kong or London. I am of the firm opinion that as population will increase we will see prices spiralling for prime properties. It will match those of Hong Kong and London,” Danube Group Chairman Rizwan Sajan told Emirates 24/7.
He states the time is right to buy property since the realty market will pick up pace from 2017 onwards.
“Summer and Ramadan has had a little impact on sales. Rentals have, however, remained stable. We expect recovery from next year and that will lead to price hikes. We will see demand from global investors who see the emirate as a safe investment haven.”
Dubai is at a stage where the property market is maturing and where genuine investors are getting the confidence to invest, said Mahmood Shaikhani, Managing Director, Shaikhani Group of Companies. “Today if you see prices are much more stable as compared to 2007/08 and good rental returns on investment. In another five years, the market will be stronger in a sense that people will be investing in Dubai than anywhere else as the emirate will be the centre of investment,” he added.
Craig Plumb, Head of Research at JLL Mena said: “Rents and prices have fallen between 10 per cent and 15 per cent since the market last peaked in mid-2014 and the market is now relatively stable, with little change in rents and prices recorded in the second quarter of 2016.” Provided there are no major external shocks, he says, it is likely that this sector of the market will recover again from late 2016 or early 2017.
“We believe the Dubai residential market offers good long term growth opportunities and purchasing around the bottom of the cycle is always a good time to buy for those taking a long term view,” he said.
Crucial factors driving recovery
A number of encouraging trends that will contribute to the performance of the real estate sector over the longer term include the continued diversification and open nature of the Dubai’s economy, high levels of government investment in creating an attractive city in which people want to live and work, and effective measures to improve the transparency of the realty sector.
According to UK-based Knight Frank, $1 million (Dh3.67 million) can buy almost nine to seven times more space in Dubai than Monaco and London.
An investor can buy 155 square metres of prime property in the emirate for $1 million compared to only 17 square metres in Monaco; 20 square metres in Hong Kong; 21 square metres in London; 39 square metres in Singapore; 41 square metres in Sydney; 50 square metres in Paris; 79 square metres in Moscow’ 48 square metres in Shanghai, and 96 square metres in Mumbai.
Rental yield in the emirate are globally unrivalled, with gross rental yield for apartments ranging from 7 to 10 per cent per annum compared to mere 2 to 3 per cent in other global cities. Dubai is the host city for Expo 2020, which will run for a period of six months, starting October 20, 2020 till April 10, 2021. Over Dh25 billion investments is expected in infrastructure-related projects, with 277,000 new jobs being created.