The Dubai property market is set to benefit from the political turmoil currently sweeping across some parts of the Gulf region, an executive at real estate advisory firm
Landmark Properties has said.
Saeed Hashmi, Head of Valuation and Advisory at Landmark, says that the company has received significant increase in interests from overseas investors seeking property in Dubai, during the first half of 2011, “as it is seen as a safe haven for investors in the region.”
“Such investors are mainly from Eastern European countries, indicating a growing sentiment that Dubai's property market is now offering investors greater value for money,” he told Alrroya.com in Dubai.
According to the executive, the type of property overseas clients are looking for varies, with many wanting to invest heavily across various property sectors.
“In comparison to mature Western markets, investment property in Dubai attracts much higher equivalent yields, that is, more than 9 per cent for prime property, albeit under differing terms, suggesting that the significant yield margin and long term growth prospect in certain sectors is re-attracting healthy investment appeal, Hashmi added.
A real estate analyst for Deutsche bank Nabil Ahmed echoed the same sentiment, saying, “Regional unrest has highlighted Dubai as a safe harbour, and the real estate could benefit from this.”
“We expect foreign money in some countries like Egypt, Syria and Bahrain to be withdrawn and reinvested in Dubai, as investors flee the widespread political unrest and weakening property sectors in these areas,” Ahmed added.
Dubai rental rates to slide 65pct from 2008 peak
Plunging rental rates coupled with excess stock in both commercial and residential housing Dubai is also boosting the industry as tenants benefit from lower lease rates.
New figures show that prices in Dubai are set to plunge 65 per cent from their peak at the end of 2008 peak. They will fall by 5 per cent in 2011 and another 1 per cent in 2012, with only a 40 per cent median chance of rising again by 2013.
In Abu Dhabi, statistics show that prices will fall 55 per cent before they start to recover, and expect them to drop 11 per cent this year and another 7 per cent in 2012.
“Even comparing residential prices in Dubai with other international markets, Dubai is now offering more for less,” Hashmi said, adding “Nearly 20,000 to 25,000 units are expected to be delivered in Dubai this year, which should pressure prices further.”
At a Cityscape real estate meeting recently, experts also focused on the need for transparency and openness between landlords and tenants, saying fair pricing and quality of buildings being offered is now central.
Allon van den Bergh, director of real estate at Ericsson said: “Buildings were built to make Dubai look great on the outside. However, the quality of the product was quite average. As a tenant, I want a quality landlord that has a real interest in their building.”
The experts also debated about sustainability in construction, and the need for developers to take responsibility for the environment, during the various stages of development of their projects.
Van den Bergh also pointed out that energy prices are going up, and “so to reduce costs buildings need to run better and more efficiently.
“If we are going to be market leaders, and continue to be, then we have to address this (sustainable buildings),” he added.
Saudi stimulus package impacts Jeddah’s realty
Meanwhile, the impact of massive government investment in infrastructure and the recent SAR500 billion financial stimulus package are starting to filter through the Jeddah real estate market, property advisory firm
Jones Lang LaSalle has said.
The Saudi residential market has seen an increase in both rents and prices over the six months, with the market moving further into the upturn stage of its market cycle, and a further growth in prices and rents is expected over the remainder of 2011 as demand increases and supply level remain constrained.
“The need to provide more affordable housing is generally recognised as one of the major challenges facing real estate industry across Saudi Arabia,” JLL said in its latest report focusing on Jeddah’s property sector.
Saudi’s ministry of economy and planning estimates that a further 1.25 million new housing units will be required between 2010 and 2015 to meet the needs of the young and growing population.
“While not all of these units will be in the affordable sector of the market, the largest single component of the recent SAR500bn stimulus package announced by King Abdullah was to provide for an additional 500,000 affordable housing units across Saudi Arabia.”
Along with other parts of the Kingdom, Jeddah currently faces a shortage of affordable housing for lower income families, and JLL estimates that the city is currently experiencing a shortage of between 100,000 and 150,000 homes that are affordable to the 50 per cent of the city’s population earning less than SAR5,000 per month.
The high cost of residential land is one of the major factors contributing to inability of the development industry to provide sufficient affordable housing to meet the needs of the Jeddah market,” the property advisory firm stated.
Consider also reading:
Political upheaval dents Cairo’s real estate sector
Rental rates in Jeddah, Riyadh soar on high demand
Cityscape Jeddah to focus on affordable housing
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