Why Expo 2020 Dubai is a boon for the real estate sector

Dubai - Developers continue to be busy, especially in hotel, affordable housing sectors

Expo 2020 Dubai is bringing a great focus to the real estate market and developers are keen to bring more hotel and affordable housing projects in the area as the investment in infrastructure developments continues, an expert says.
Steven Henderson, partner at Baker & McKenzie Habib Al Mulla, said the legacy of Expo 2020 will be the infrastructure serving the area and the site being re-purposed for social, educational and other uses, which is a great outcome for the area and also the surrounding developments.
"Our master developer and developer clients continue to be busy, especially in the hotel and affordable housing sectors, and we have seen a number of developments around the Expo 2020 site, including at Dubai South and Jumeirah Village Circle," Henderson told Khaleej Times.
"We expect to see further developments around this area as the investment in infrastructure that is needed to support the Expo site continues," he added.
Henderson is a New Zealand- and UK-qualified lawer who has been working in the Middle East since January 2006 and has extensive real estate development and hotel-related experience.
He was also one of the keynote speakers at this year's Cityscape Global and participated at the leader's panel discussion on "Beyond Expo 2020: A glimpse into the future of Dubai".
 
Real opportunities
Henderson said legislation and regulations in the UAE real estate sector have already come a long way in a short period of time - the first significant piece of legislation in Dubai allowing foreign investors to own real estate in designated areas was passed only 10 years ago and there is now a number of key laws applicable to the sector.
"This has really helped investor confidence in the market," he pointed out.
"Expo 2020 is bringing a great focus to the market; we are hopeful that continue the evolution of legislation and regulations to continue to increase transparency and investor confidence to the market [for UAE developers as well as for purchasers and end users]. Examples include the extensive real estate laws passed in Abu Dhabi last year as well as the bankruptcy law, which has recently been approved by Dubai's cabinet."
To a question on how investors examine locations, property types and buyers' profiles, he said they believe in the long-term perspective of the UAE real estate market.
"From a legal perspective, we are seeing developers and investors taking a much longer-term view of the real estate market, with genuine interest in community facilities, social infrastructure and connectivity - issues that have historically have been less important when the market was more speculative," he said.
 
Innovation, challenges
About the innovation in real estate adding competitive advantage and sustainable long-term results, he said innovation has become an important part of the real estate industry.
"Given the increased regulation in the real estate market, innovation is being increasingly important for developers to attract developers and work within the regulations," he said.
"Recent examples include introducing a much more investor-friendly payment plans to attract the right type of investor into the project. Also, we have seen a number of master developers and developers going to market with 'ready-to-go' developments, whether they are 'built-to-suit' or they sell a pre-planned/approved development to reduce the development phase."
To a question about the challenges, he said financing and reduced liquidity in the market is a key issue for developers.
"While it is not the only issue, it is certainly one of the issues that is impacting the number of developments and size [with larger developments being broken down in phases]. It does create potential opportunities for mezzanine and alternative financing arrangements, which we are seeing more and more."
About the viability of retail centres in new developments, he said the trend is expected to continue in near future.
"From a legal perspective, we still see a strong demand for the existing retail centres. A number of the existing centres are also redevelopment and adapting, so it will be interesting to see how the market develops," Henderson concluded.
- muzaffarrizvi@khaleejtimes.com