Dubai real estate investment to pick up by year-end

Low property prices guarantee higher yields for investors.

The last two quarters of 2016 should see higher demand in the Dubai real estate market, says Ranjeet Chavan, director of SPF Realty, a property brokerage firm.
This will be welcome news for prospective investors who are waiting on the sidelines, waiting for Dubai property prices to bottom out before committing to a purchase.
"A lot of infrastructure development is ongoing in Dubai, especially works on the Expo 2020 site," says Chavan. "With the government investing into large infrastructure projects, the anticipated growth of the tourism sector and more new companies looking to make Dubai their base for the GCC and African regions, housing demand is only poised to increase in the next four to five years."
Downward pressure continues to be put on the Dubai residential market as a result of falling oil prices, a generous supply pipeline, the strengthening dirham against a range of traditional investor economies and uncertainty in the region, according to latest research from Core, UAE associate of Savills.
Chavan believes the Dubai property market went through a healthy correction phase in 2015. "Over the last few years, the Dubai real estate market has become a lot more mature and buyers/investors are well informed about the market. Developers with a good location, quality project combined with a reasonable price point and innovative payment plan will emerge winners," he informs.
Back-loaded schemes
For instance, he cites projects such as Jade at the Fields and Millennium Estates in Mohammed bin Rashid City, which received encouraging investor response owing to a good location and innovative payment plans. The Fields, a gated townhouse community, lets the buyer pay 65 per cent of the property value across three years after handover.
Such back-loaded payment schemes are in plenty now and open up new horizons for end-users, who can finally think of hopping onto the home ownership bandwagon in Dubai.
David Godchaux, CEO of Core, says: "The decline in prices at a quicker rate in comparison to rents has resulted in increasing yields. We expect this to continue for the best part of 2016, making it more interesting for renters to consider ownership and for investors to re-enter the market at lower prices and higher yield levels."
In terms of off-plan property, the right location, a good price point and solid developer credentials are what attract investors. Meanwhile, for ready properties, units in prime locations such as Downtown Dubai and Business Bay will continue to perform well, says SPF Realty's Chavan.
"These residential communities are the most mature compared to other projects. With infrastructure completed and almost all community developments operational, these areas will drive the real estate market in the next few years. Occupancy levels in these communities are above 90 per cent and to find a suitable vacant unit in these areas has become virtually impossible," Chavan points out.
High rental yields
He contends that the ratio of investors putting money in ready and off-plan projects is evenly poised. Ready properties in Dubai will fetch investors an annual return of up to seven to eight per cent, among the most robust in international property markets.
SPF Realty achieved sales of over Dh2 billion 2015, an eight per cent increase from 2014.
"Over and above 2015 numbers, we expect a 25 per cent increase in sales in 2016," Chavan adds.
The brokerage will take out property road shows in China, Hong Kong, Delhi, Mumbai, Pakistan and London to promote Dubai real estate opportunities in 2016.
Indian nationals topped the list of expatriate real estate buyers in 2015, with United Kingdom citizens in second place and Pakistanis third.
"We are also looking to open a few branches in 2016, aimed at catering to communities such as Emirates Living, Jumeirah Park, Jumeirah Islands, Arabian Ranches, Motor City, etc," Chavan concludes.
- deepthi@khaleejtimes.com

• Dubai