Dubai: Dubai’s property market will continue to experience growth for the remainder of the year as expatriates look at the emirate as a safe haven for investment, experts say.
“There are a number of reasons people look to Dubai — the emirate has good capital growth compared to other markets,” Matthew Green, head of research at property consultancy CB Richard Ellis in Dubai, said.
But Green said that an increase in property transactions in 2013 leading to market growth had also contributed to increasing sales and rental prices.
According to the Dubai Land Department, real estate transactions were up 63 per cent year-on-year in Q1 2013, reaching $12 billion (Dh44.08 billion). A statement released by Cityscape organisers said the figures showed signs of growing investor confidence in the local property market.
An Emaar spokesperson said the developer’s sales in the first half of the year have been strong, underlining investor confidence.
But experts remain cautious about how authorities can regulate cash purchases.
Factors affecting demand
“More than 75 per cent of Dubai’s real estate transactions are cash deals,” Tareq Ramadan, chairman of UAE real estate and business conglomerate Tharaa Holding, said in a statement. This means interest rates and other constraints on loans will have a minimum impact on overall demand, he added.
Green added that the local market had to be wary of foreign investors. “As conditions change outside, if Europe recovers, we have to understand that a lot of these cash investors are very mobile,” Green said, adding, “They are not tied in as you would be with mortgages.”
But Green said there were other regulations that could be looked at as it was uncertain what difference the mortgage cap system would have in a cash-predominant market.
Ramadan said that recent regulatory reforms provided a transparent environment for property investors but it would be hard for authorities to place restraints on demand to avoid another bubble.
These expert comments come ahead of the upcoming Global Real Estate Summit in October to be hosted in Dubai alongside Cityscape Global — the region’s largest real estate event.
Headache for regulators
It’s expected that market sentiment will be the focus of debate at the Summit, with cash transactions in Dubai’s property market causing headaches for regulators, the statement added.
Dubai’s property market has experienced steady growth but experts are debating whether enough is being done to sustain growth — or whether Dubai is entering another bubble, the statement said.
The Emaar spokesperson said that together with authorities, large developers have also taken concerted measures that benefit property sector stakeholders.
The residential market — which has been recovering for the best part of two years — was not the only sector experiencing growth, Green said, with the office segment also showing signs of improvement.
But for Dubai to remain competitive, it needed to be wary of increasing rental prices, making the emirate unattractive to new companies, he said.