UAE-Israel treaty will boost trade, drive real estate market
Dubai real estate sector seen to benefit most; more investment set to be attracted from untapped market in region
The peace treaty between the UAE and Israel is a game-changing initiative and will open up new horizons that would benefit key economic sectors and bring prosperity to the region, industry experts say.
On Saturday, the UAE scrapped an economic boycott against Israel, allowing trade and financial agreements between the countries in another key step towards normalising ties. The two countries are expected to hold talk this week to promote bilateral cooperation in sectors such aviation, tourism, trade, finance, health, energy and security.
The strategic deal, which still awaits negotiations on details such as opening embassies, trade and travel links before it is officially signed, will benefit the Dubai real estate sector and attract more investment from an untapped market in the region.
Latest data from a leading real estate consultancy indicated that there were significant demand-supply imbalances during 2012-14, where Dubai had an average of 90,000 additional residential units. However, the emirate is expected to have less than 70,000 additional residential units during 2018-21 that will help stabilise the market and attract huge investment from Israeli investors.
Leading developers said the landmark move will help absorb surplus inventory and create more demand for residential units in one of the best cities offering excellent infrastructure and life style in the region.
Atif Rahman, director and partner at Danube Properties, welcomed the peace treaty and said it is a step in the right direction that will bring economic stability and prosperity in the region.
"It's a big initiative and will benefit the UAE economy in general and Dubai real estate in particular. The strategic move will help bring more investment into the UAE economy and the property sector will be major beneficiary of it," he said.
The real estate sector plays a big role in the UAE's economy, primarily in Dubai. In addition, the other emirates, notably the capital Abu Dhabi, have shown great strides in developing their local property market in the past few years.
As per latest data, the property sector's contribution stood at 5.4 per cent or Dh80.2 billion of GDP at constant prices for the UAE. The sector contributed 7.4 per cent or Dh15.5 billion and 3.6 per cent or Dh28.7 billion, of GDP for Dubai and Abu Dhabi, respectively.
Imran Farooq, chief executive officer of Samana Group of companies, said the peace deal will have a strategic impact on region's geo-economic situation.
"It is highly expected to attract new stream of massive foreign direct investment from a new market. The treaty has opened up new horizons for the UAE," Farooq told Khaleej Times.
In the Middle East, the UAE's position as a financial hub should further strengthen, he said, adding that the UAE is also expected to see a flood of new businesses, investment and companies, which will give it a perfect recovery before Expo in October 2021.
"Dubai's real estate will be the biggest beneficiary of the deal as the new investor stream is expected to help absorb the surplus real estate inventory. Also, both the UAE and Israel share their technological expertise of the sector which will strengthen Dubai's real estate," he said.
Gary Dalton, managing director of Zoomproperty, said the recent announcement that the UAE and Israel are to normalise diplomatic relations has largely been welcomed by the international community, and has been seen as a bold and progressive step by the UAE government.
"It is still early days but the economic benefits to the UAE could be wide reaching across investment, tourism, security and telecommunications among others, and potentially on the real estate sector," Dalton told Khaleej Times on Saturday.
He said the announcement of the first flight from Israel to the UAE is a highly significant milestone and is a precursor to one immediate benefit, which is the influx of Israeli tourists into the UAE, giving this sector a much-needed boost.
"The indirect benefit of tourism could be on the UAE real estate sector. Israeli property investors could open up another potential market that developers and real estate brokerages could look to tap into. Right now is a good time to invest in the UAE property market and many Israelis would certainly be interested in such an investment opportunity," he said.
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