GCC, Arab investors lead charge in Dubai realty

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GCC, Arab investors lead charge in Dubai realty

The renewed activity in Dubai’s real estate market is once again bringing in investors from around the world to the emirate.

By Ziad El Chaar (Property Focus)

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Published: Sun 29 Sep 2013, 10:55 AM

Last updated: Sat 4 Apr 2015, 9:15 AM

Dubai has emerged as the top choice in the region to own real estate on the back of political and policy stability, a vibrant market where returns are assured and a safe environment far from strife-torn areas yet culturally akin to investors’ preferences. — KT file photo

Drawn by returns that remain amongst the highest in the world — a recent finding by a Knight Frank Wealth report placed Dubai as the third-best performing real estate market in the world — investors from far and wide are moving in to take advantage of this resurgence, making global liquidity flow into Dubai again.

At the forefront of this charge of capital into Dubai’s property sector, which has seen price increases as high as 21 per cent in the first half of this year according to some reports, are investors from the Arab and GCC countries. According to data released recently by the Dubai Land Department, or LD, GCC and Arab investors pumped close to Dh10 billion into Dubai’s real estate market last year. Seen as a group they are the single largest source of foreign investment in Dubai property and the second-largest investors overall after UAE nationals themselves, who spent a total of Dh13 billion in Dubai’s real estate sector.

Out of this total spending by Arab and GCC investors, the latter contributed more than Dh4.7 billion, led by Dh2 billion by Saudi nationals alone. Saudis and GCC investors have traditionally viewed Dubai as the place to buy a second home. The city is where a lot of GCC national families spend extended vacations, taking advantage of its proximity to their homes countries and the myriad opportunities it offers for leisure, shopping and amusement. In effect, its familiar environment, excellent infrastructure and world-class facilities make it a home away from home — or what home should be. And this is reflected in the choice of property that they seek to buy for their families here in Dubai, which falls mainly on the higher end of the scale.

This is corroborated by our own experience at Damac Properties, which tell us that GCC investors prefer luxury offerings as their second home or holiday home in Dubai. GCC nationals make up a huge percentage of our customers and have contributed greatly to the success of many of our projects. In fact, GCC nationals have been at the vanguard of the resurgence in property sales during 2012.

As far as other Arab investors are concerned, it’s a classic case of history repeating itself. Historically, capital has tended to flow into places where it can find safe havens and what we are seeing in Dubai’s property market is no exception to this.

Much like the Florida property boom of a few decades ago, which was fuelled to a large extent by the investable surplus of the strife-torn Central American countries flowing into the southern US city, or the sharp spike in property prices in already-saturated Hong Kong in the wake of the Tiananmen Square incident as relatively wealthy Chinese took their money out of the mainland fearing re-tightening of state control, Dubai’s property market is benefitting from the turmoil in several countries of the Arab world.

A quick look at the figures reveals the picture. Over 2,109 Arab investors invested Dh5 billion in Dubai’s property sector last year, according to LD figures, with Jordanians topping the chart followed by Lebanese, Egyptians and Iraqis. Ever since the Arab Spring revolutions started in 2011, for property buyers in the Levant and North African countries, Dubai has emerged as the top choice in the region to own real estate. They get the assurance of political and policy stability, a vibrant market where returns are assured and on the up and a safe environment far from strife-torn areas yet culturally akin to their preferences. It comes as no surprise then that during 2012 we saw a constant increase at Damac Properties in the number of our customers from these countries — a pattern which has continued so far in 2013.

As Dubai keeps to its path of good governance, stability, providing superior infrastructure and the best leisure facilities in the region, its real estate sector will continue to attract buyers from GCC and Arab countries, whether as a safe haven for capital that is fleeing unrest or as a lifestyle destination.

The author is the managing director of Damac Properties. Views expressed are his own and do not reflect the newspaper’s policy.

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