The UAE’s property sector has cast off its former reckless countenance, had a trim and a shave, and grown up. Dubai, in particular, appears to have become master over its younger, more immature self of 2008.
A broad residential sector recovery from the worst of times has led the market to the best of times today.
Transaction and rental rates are once again on the rise. The Real Estate Regulatory Agency (Rera) has implemented numerous safeguards for investors and buyers. The city’s strong economic performance — GDP grew by 4.4 per cent in 2012, according to a Jones Lang Lasalle report — propagated by the flourishing of DIFC, will see the emirate promoted from a frontier to an emerging market in May 2014, states Morgan Stanley Capital International’s market classification report.
All of which essentially means that investors can be more confident regarding real estate markets — and consumer confidence is everything in the property market.
Now, as a swathe of new master developments begin to hit the market, alongside an encouraging number of resuscitated old projects that had been halted during the downturn, speculators and investors are returning to cash in on the lucrative property scene.
Helen Tatham, Director of Residential, Knight Frank, says Downtown and Business Bay have become two key localities, thanks to the commercial and social shift towards these areas.
“In terms of investing [in Business Bay and Downtown] it fits in with the wider picture of Dubai. Now is a good time to buy because prices are rising, rents are rising, and it’s a good time to get on the property ladder, while the cost of buying is still relatively low compared to 2008, particularly if you’re new to the city.
“With yields of 4-5 per cent for investors that own Dubai property, it makes sense to buy here if you’ve got a two-year plus strategy,” she adds.
Dubai’s rental rates increased, in percentage terms, more than any other city in the world between March 2012 and March 2013 — up by 18 per cent over this period, according to data collected by Knight Frank.
As prices skyrocket, albeit at a slightly tempered pace thanks to the Rent Cap decree and the amount of new supply entering the market, JLL research indicates a trend towards investing in more affordable, secondary locations as primary areas witness a slower, more sustainable pace of growth.
Opinion is, however, divided on investment strategies. With speculators returning to the market, thanks to the notable rise in off-plan property being marketed and sold, the prospect of another crippling bubble is looming large.
Completed projects offer the most secure investments today, but off-plan purchasing isn’t as risky as it used to be, given the raft of legislature Rera has endeavoured to pass into the property legal framework.
There’s also a case to be made for secondary locations based in newer or lesser-marketed developments, says Jay Grant, Managing Partner at Cavendish Maxwell: “So long as the price is realistic and the necessary due diligence has been carried out, even properties of a more average quality in secondary and tertiary locations can be good investments.
“Rental levels aren’t set by money paid for a property — it is the market that dictates rents, and underpins prices.”
Anantara Residences
Seven Tides
Palm Jumeirah
A completed development on the Palm is a rarity that induces much licking of lips from high-end investors seeking a lucrative property — and the recently completed Anantara Residences, developed by Seven Tides, ticks all the requisite boxes. Fronted by a private stretch of white, sandy beach, the 442 luxury apartments and 14 penthouses are set in a stunning location, offering panoramic views of the Arabian Gulf, Atlantis hotel and the iconic Burj Al Arab. “The beauty of this development lies not only in its highend aesthetic appeal and exceptional interior design, but in the fact that this is the only project to be sold as a completed product, offering investors the immediate luxury lifestyle that Palm Jumeirah homeowners would expect,” says Abdulla Bin Sulayem, CEO, Seven Tides.
Dubai Hills Estate
Emaar
Mohammad Bin Rashid City
A sure sign that Dubai’s property market is well and truly back on the upswing is Emaar’s planned Dubai Hills Estate — the first phase of the much-hyped Mohammad Bin Rashid City. The vast, 11 million-squaremetre joint venture between Meraas Holding and Emaar is set to feature a variety of residential units, including luxury villas in a gated community, as well as an 18-hole championship golf course located just ten minutes from Downtown Dubai, Emaar’s flagship master development. Tatham says Emaar’s track record of delivering projects is reason to be confident in projects such as Dubai Hills. “Broadly speaking, Emaar is the lead developer of choice. We’re very familiar with the products and maintenance levels they provide, so you can be confident with them.” Emaar has famously delivered both the world’s tallest building, Burj Khalifa, and biggest shopping centre, Dubai Mall.
Water’s Edge
Damac
Burj area
Marketed as the “sensible Dubai property investment”, Water’s Edge is Damac’s 20-storey, $123 million (Dh451.7 million) mixed-use luxury serviced apartment tower located in the Burj area. Launched in 2007, the project is slated for completion in the first quarter of 2014, revived after the 2008-09 crash put the project on the back burner.
Bay Square
Dubai Properties Group
Business Bay
The proximity of Dubai Properties Group’s five-million- square-feet Bay Square project to the future commercial and social epicentre of Dubai is the development’s greatest USP. Four hundred and fifty commercial and residential units in the completed phase one of the mixed-use mega-development were sold within days of the announced completion of the first phase. Phase two is now online. Expect to see a similar investor uptake, given the increasing demand for high-quality mixed-use developments from local and overseas investors. Tatham believes that Business Bay is one of the key areas to consider for long-term investment dividends. “Business Bay will be able to feed off the benefits of Downtown. “The majority of Downtown is residential, so there’s room for more commercial buildings in the area, and Business Bay will be the obvious choice. And for residential purposes, it will be extremely central and desirable,” she says. The RERA-registered Bay Square development will include 12 towers upon completion, including one million square feet of dedicated commercial space. Commercial property investors are being offered a finance package of 30 per cent upon booking, with the remaining 70 per cent to be paid on handover.
Legacy Nova Villas
Nakheel
Jumeirah Park
In just five hours, Nakheel sold 350 four-and five-bedroom Legacy Villas for a whopping Dh1.4 billion amid a blistering frenzy of activity when the developer released for sale the first completed villas in its master community development, Jumeirah Park. The good news for investors that missed out in June is that Nakheel is launching more. Four hundred and sixteen more four-bedroom Legacy Nova Villas are expected for completion in 2015, with sales expected to begin next year. To date, 1,795 villas developed by Nakheel have been completed in Jumeirah Park. Nakheel’s Legacy Villas are anticipated for completion in the fourth quarter of 2014.
Burj Pacific
Pacific Ventures
Downtown
The latest high-end development in the Downtown area has literally sold like hot cakes. More than Dh100 million, for just over half of the 140 apartments, has already been thrown at the project by investors eager to capitalise on the joint Sherwoods- Pacific Venture high-rise residential build. The initial booking deposit is 15 per cent, followed by an additional 35 per cent during the two-year construction period, with the remaining 50 per cent balance due upon completion of the project in the second quarter of 2016. Prices start at just over Dh1 million for a one-bedroom apartment in the tower. Over half the apartments have a view of the Burj Khalifa, thanks to Burj Pacific’s Lshaped design.
