Low prices, high rentals lure investors at Cityscape
Stall incharge interacting with visitors during Cityscape property expo at World Trade Center in Dubai. Photo by Neeraj Murali.
Dubai - "In Dubai, Abu Dhabi and Sharjah prices cannot go any farther down," property experts said at Cityscape Global.
With real estate prices in the UAE moving towards the bottom of the downward curve and rental yields remaining attractive in comparison to other global mega cities, property pundits believe there cannot be a better time to buy.
"After passing through relentless correction since mid-2014, there is now widespread optimism of an impending upswing, at least by the first quarter of 2017. In Dubai, Abu Dhabi and Sharjah prices cannot go any farther down," property experts said at Cityscape Global.
Various factors are bringing the market towards the bottom of its cycle. "On one hand, the strong dollar is impacting the greenback pegged GCC currencies, which is making Dubai real estate more expensive for buyers from non-dollar pegged markets. On the other hand, the continued period of low oil prices is tightening regional liquidity which is also affecting the real estate market," said JLL's head of research Craig Plumb.
Experts believe more long-term players are likely to enter the market in the next few years rather than speculators who once dominated the scene. "With Dubai's market now becoming more mature, there are many more players and more transactions, enabling a stable environment for investors."
A general consensus is that while the market will remain subdued during 2016, the next boom cycle -- albeit not in double-digit growth rates of 2007-- is most likely to last till 2020, presenting a upbeat market scenario for both end users and long-term property investors.
While Dubai is expected to see an addition of over 3,000 housing units this year, attractive prices and rebounding investor optimism will offset the imbalance in the supply and demand situation, paving way to an inevitable upturn by the first quarter, experts said.
Hussain Sajwani, chairman of Damac Properties, said he remained confident in the property market in Dubai.
"The Dubai market remains solid. We believe that Dubai is well positioned for continued growth, and we expect the city to consistently outperform more established metropolitan centres around the world," Sajwani said.
"This outperformance is underpinned by a stringent and efficient regulatory framework," he said.
PNC Menon, chairman of Sobha Developers, said the downturn that started from the second half of 2014 continued during the whole of 2015. "Dubai goes through a four-year cycle which includes two years of positive and two years of negative. Considering the negative hit in 2014, we should be ending the negative cycle by more or less the end of this year."
Menon said another important aspect is the rental returns which are on an average eight per cent, depending on the precise location, from apartments in Dubai. "What adds to making property investment in Dubai lucrative is the fact that the city does not levy any taxes on income generated from rentals. Similarly, it does not levy any capital gain tax in case of a sale of a property."
Rizwan Sajan, chairman of Danube Properties, believe it is a very good time to invest in Dubai as the economy is moving towards a strong recovery and is sure to give high long-term rate on investment.
"Over the years, Dubai has established itself as a top-notch destination for residential and commercial developments with state-of-the-art infrastructure and amenities, attracting investors from across the world. Additionally, the policies that the Government has implemented with regard to home ownership, has allowed a number of property developers to cater to the diverse needs of the existing market and has resulted in the increase of expats investing to own homes in Dubai," said Sajan.
"Now is a good time to invest in property in Dubai as there are many products available to suit the needs of our clientele, with attractive prices and attractive payment plans or free service for a number of years included," said Ziad El Chaar, managing director, Damac Properties. He said Damac launched an attractive product, AKOYA Imagine 2.0, in the heart of the golf community AKOYA Oxygen, which proved to be very popular for those seeking a good investment with high returns. These villas, suitable for millennials, are being offered at a special price of Dh999,999.
More than Dh57 billion was invested in real estate in Dubai during the first half of 2016. The market now offers stronger yields and potential for greater capital growth in the run up to Expo 2020.
The August'16 ValuStrat Price Index (VPI) shows mixed price performance. Overall VPI reveals attractive price to rent ratios: 19 years for villas and 14 years for apartments and gross yields of 5.5 per cent for villas and 7.5 per cent for apartments; net yields of 4.4 per cent for villas and 5.3 per cent for apartments.