The wide world of realty

Gulf investors, flush with cash, eye global real estate.

As the real estate market continues to grow both in the GCC and on a global scale, investing in property is one of the most profitable options.

According to media reports, Gulf investment in foreign property will soar in 2008 because of the liquidity in the region and credit crunch in other parts of the world. In a media interview, Blair Hagkull, Managing Director (Middle East and North Africa) of Jones Lang LaSalle (the world's second largest commercial real estate broker) said: "Flush with surplus cash from record oil revenues, Gulf Arab investors will spend more than $20 billion (approximately Dh73.4 billion) on international property acquisitions in 2008."

The International Property Show 2008, which opens at the Dubai International Exhibition Centre from February 17 to 19, provides a clear indication of this trend. As the biggest transactional property exhibition in the region, IPS 2008 will attract major developers and high-value investors from around the world. It will also feature prime real estate projects from across the globe, ranging from commercial properties to high- and low-density residential developments, distinctive leisure and shopping centres as well as resorts and hotels.

According to Martina Molloy, IPS 2008 Director, Strategic Marketing and Exhibitions, Gulf investment in foreign property will always be a popular choice for investors who wish to diversify in different markets. Last year the event saw international and regional property developers closing multi-billion-dollar deals.

"This year's event will showcase the current expansion of the property market in Argentina and Australia. Also the American real estate developer Corcoran Group, which had sales reaching $130 million (approximately Dh477 million) last year from its residential ocean liner, is back again with a larger portfolio. In addition, real estate giants from Cyprus, Thailand and Singapore are all set to showcase their projects in Dubai," said Molloy, who believes that the most promising real estate hubs today are undoubtedly China and India, due to the booming economies of both the countries. Damac has, in fact, planned to invest more than $5 billion (approximately Dh18 billion)in the Indian market over the next three to five years.

As an ideal platform for local and international exhibitors to showcase their latest projects, IPS 2008 will bring together high net worth individuals and real estate professionals seeking worldwide investment and business opportunities. "The region's highly diverse customers are focused on finding overseas investments which satisfy their specific needs," said Molloy.

"There is enough evidence that Gulf investment in overseas property will only grow in the next few years. People are buying foreign property for various reasons. End users are looking for a second home for holidays or a potential retirement home, and investors are wanting to spread their portfolio by looking at newer, less-developed markets to capitalise on lower prices and high anticipated returns," said Billy Rautenbach, Director-Operations, Better Homes, Dubai.

Worldwide investment

According to Eamon Alashkar, Head of Research and Advisory at Colliers International UAE, "Much of the investment into Dubai has been from regional and international sources, so it's only natural that capital from such sources is also being invested elsewhere. Dubai-based sources of capital have been ploughed into regional and international markets such as India, Malaysia, Pakistan, Russia and China." Alashkar feels that it is now a good time to start researching the US and UK markets for investments opportunities. "The US credit crunch has obviously affected the real estate markets there and in the UK we are seeing commercial investment cap rates edge outwards as prices are being dropped to secure sales."

Besides showcasing international property to the Dubai market, the International Property Show also points to the fact that the region is now growing into an international player. "Dubai has a leading impact on the rest of the region, so as the show kicks off in Dubai we may see offshoots of these shows in other regional cities," said Rautenbach, who believes that 2008 will be a big year for the Abu Dhabi market with some exciting developments under way. "The real estate sector in the Middle East and North Africa (Mena) is also experiencing a surge with Gulf developers expanding into the region," he said.

According to Molloy, properties in Dubai have built a strong reputation across the region for the value they brings to investors. "Dubai is a highly sought-after destination, so buying property here offers the investor with a wide array of benefits. Following Dubai's movement towards becoming the world's real estate capital, the neighbouring emirates are also witnessing considerable growth in the real estate front," she said.

Tremendous regional liquidity, a business-friendly government, strong end-user demand due to the growing economy, greater availability of finance and accuracy of information have helped sustain the property boom in Dubai, said Alashkar. "But it is very likely that the current excess demand conditions will convert into excess supply. Our research department is tracking considerable growth mainly across the Emirates Road and Shaikh Zayed Road growth corridors."

Luxurious projects

In Dubai, Emaar is currently developing the Dh73 billion Downtown Burj Dubai and is also developing three luxurious projects — Marina Promenade, Marina Quays and Park Island within the Dubai Marina. It is developing residential towers within The Views master-planned community, a part of Emirates Living, the Polo Homes at the Dubai Polo and Equestrian Club and luxury villas at the Arabian Ranches. In the coming months it will hand over several hundred homes to investors in Dubai.

Emaar has expanded into several emerging markets in the Middle East and North Africa, India and South-East Asia. According to an Emaar spokesperson, these markets have shown consistently good economic performance in the past years and have adopted structural and economic reforms to improve foreign direct investment. Like Emaar, master developer Damac has launched 81 state-of-the-art projects across the UAE, Qatar, Jordan, Lebanon and Saudi Arabia.

In figures: Development updates
According to published reports a minimum of 125,000 units will be handed over in the Dubai market between 2007 and 2009, of which the majority is due in 2007 and 2008.
– Hussain Sajwani, Chairman and Founder of Damac Holding

Dubai's commercial property sector is witnessing a continuous increase in demand, with more than 24 million square feet of commercial space being developed to accommodate expansion of new and existing international and domestic companies. Significant new office space deliveries by the third quarter of 2008 will bring noticeable relief to rising rents and excess demand.
– Colliers International Report on Dubai Real Estate (Fourth Quarter 2007)