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Finding lucrative property buyers overseas

Dubai developers figure out what foreign investors want

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Dubai’s advanced transport infrastructure is a catalyst for real estate growth
Property Weekly

A concerted effort by real estate stakeholders to expand into international markets has seen significant gains in the past few years. Last year alone the Dubai Property Show, one of several real estate initiatives aimed at the global market, attracted some 10,000 potential investors and generated enquiries valued at around Dh3 billion from key cities such as Shanghai, Mumbai, Moscow and London.

“Developers have been selling properties abroad even in 2002 and 2003, when launches were happening in Saudi Arabia, Singapore and other places simultaneous along with a launch happening in Dubai,” says Asanga Silva, deputy general manager of the Dubai Property Show, an initiative of the Dubai Land Department (DLD) supported by various local developers. “However, recently a lot more promotions are happening abroad because of various DLD initiatives in the form of property shows, roadshows and conferences. Developers have also tied up with brokers as they see more potential in selling to investors abroad, making their pot size bigger than just targeting people in Dubai.”

More room for growth

Nearly 40,000 foreign investors accounted for up to Dh107 billion of the Dh285 billion in real estate transactions in Dubai last year. According to the DLD, the top nationalities investing in Dubai property are Indians, Saudis, Britons, Americans and Pakistanis, with investors from China, Egypt, Lebanon and Jordan also increasing. These figures, according to Niall Mcloughlin, senior vice-president of luxury developer Damac Properties, underlines not only the importance of foreign investors, but also the potential for further growth.

“Property investors are looking for stable, safe investment locations with good returns in the medium to long term,” says Mcloughlin. “Dubai continues to be seen as a haven for such investments. The market offers a diverse portfolio of properties to suit almost any budget and is backed by the tremendous effort of the Real Estate Regulatory Authority and the DLD to provide a transparent regulatory framework that protects the interest of investors.”

Damac has conducted 524 roadshows in 107 cities across 42 countries. “We are optimistic about the sector’s future, seeing it continue as a promising choice for investors in the years to come,” says Mcloughlin.

Dubai’s selling points

Dubai’s strong credentials as a lucrative investment haven has been a huge selling point for developers targeting foreign investors. “Dubai was recently ranked number 26 on the World Bank’s Doing Business report, a position it has held for three years,” says Mcloughlin. “It also holds one of the world’s highest consumer confidence rankings, tops the happiest places to live [rankings] and is the second-safest country in the world [according to the World Economic Forum].”

Dubai’s impressive transport infrastructure is another asset that underpin the growth of the real estate market. “[Dubai] serves as a trading and business base or capital for the Middle East and North African,” says Ranjeet Chavan, managing partner of Gulf Sotheby’s International Realty. “Some 300 of the Fortune 500 companies have a presence in Dubai. This makes it easy to promote real estate in Dubai, as Dubai is widely recognised and accepted as the capital of the Middle East.”

The extensive global connectivity is not only pulling in businesses, but also supporting population growth and the massive tourist numbers in the emirate — building blocks of a stable real estate market. “The city is also one of the most visited cities in the world with approximately 15 million visitors a year, but many people are still learning of the intrinsic investment opportunities in this amazing place,” says Mcloughlin. “The global awareness and Dubai’s credibility as a desirable lifestyle destination have resulted in a multinational customer base, both from within and outside Dubai.”

Pricing incentives

Competitive pricing also plays a role in Dubai’s growing global appeal. “Dubai offers the cheapest price per square foot and the highest rental yields when compared with similar global destinations like New York, London, Paris, Mumbai, Delhi, Tokyo, etc.,” says Chavan, noting that properties in Dubai can be up to 25 per cent more affordable compared with similar options in other countries. “The fantastic value offering regarding pricing and yields are the main unique selling points for Dubai properties.”

While aggressive marketing campaigns are creating positive results for Dubai, Sameer Lakhani, managing director of Global Capital Partners, says investors are generally now more circumspect, taking into consideration factors such as risk appetite, global allocation and geopolitical circumstances when deciding on an investment.

“Developers will always espouse the positivity of whatever market they operate in, but the investors need to look at the data to ascertain the desirability of any market,” says Lakhani. “Investors that have deployed capital in Dubai over a 10-year period have exceeded returns in most other asset classes, including that of US equities, gold and fixed income. Given the rapid pace of urbanisation going on in Dubai, all indicators from a data perspective indicate that the trend will continue.”

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