Infrastructure development & investment incentives will make land a top investment choice
The United Arab Emirates (UAE) is on the verge of reclaiming its rightful position as the hotbed for real estate investment judging by the sheer number of multi-billion dollar projects that are currently underway.
Players in the regional real estate sector are optimistic that mega projects such as the much-anticipated Expo 2020 alongside the ongoing capital-intense infrastructure expansion works will continue attracting investors, developers and homebuyers to the region.
Notable areas in Dubai, in particular, that indicate that the once sluggish sector is on a recovery path include Emaar South and Dubai South where demand for residential units, both from owner-occupiers and tenants is on the increase. Others include Mohammed Bin Rashid City, Dubai Creek Harbour, Dubai Harbour and Port De La Mer.
According to Al Ruwad Real Estate spokesperson, all these projects including others in and around Dubai have immensely benefitted from the ongoing government infrastructure development projects and their proximity to the Al Maktoum International Airport and the Metro Redline expansion.
“Dubai’s real estate sector is picking up pace at a significant rate thanks to the flurry of projects that are currently underway. The last few years have been sluggish but property developers, investors and homebuyers are now lining up to take full advantage of this much-awaited recovery,” said Ismail Al Hammadi, chief executive officer, Al Ruwad Real Estate.
Apart from residential and commercial property, land acquisition is also on the rise in Dubai. This, according to Hammadi, is driven by the lack of space to develop more commercial and residential units in Dubai’s most popular and favorite locations.
Investing in land
Despite its limited availability and constant increase in value, land in Dubai is still a hot commodity. Its lack of depreciation, unlike rent from an apartment block, which registered a 15 percent decline since Q3 of 2018, makes it a worthwhile investment choice for an investor.
According to Hammadi, land will always appreciate in value, which makes it a much safer investment.
“Land is one of the least risky investments and it is generally seen as a safe bet in terms of investment. Any land is a business opportunity. A vacant land is an endless pool of opportunities for small businesses, as well as bigger ones,” noted Hammadi
Signature projects such as the Expo 2020 and the increased economic activities around it notwithstanding, investors eyeing the Dubai real estate market are closely monitoring other investment indicators in a bid to ensure a favorable return on their investment (ROI).
Al Ruwad Real Estate singles out emerging investment trends such as the new schemes for buyers (post-handover payment terms, DLD registration fee waivers, free service charge offers), growth in tourist arrivals and digital technologies being implemented in the real estate, like 3D printing as growth indicators.
Al Ruwad, however, also envisages that prices in Dubai will continue to decline albeit briefly with recovery expected from 2021 onwards. The region is also expected to continue experiencing a greater increase in international investors more so from Chinese nationals who have reportedly invested close to AED500 million.
Mixed-use development projects are also emerging as an investment magnet. And with such projects offering an integrated living-working experience in the region, real estate investors and developers are more likely to go for this high-return option in the next couple of years.
Dubai 2020 outlook
If the current market sentiments are anything to go by, Al Ruwad is confident that Dubai will be a buyer’s market in 2020. This will come against a backdrop of lower prices and many incentives for buyers.
Investors in Dubai will also benefit from a tax-free property and land, which will, in turn, guarantee them a high ROI.
Dubai’s recent ranking as the second safest country in the world in 2019, infrastructure modernization and easily accessible direct flights to most travel destinations have all significantly contributed to the growth of its real estate market.
“Dubai is now one of the safest destinations in the world. It has also been ranked as the Middle East and North Africa’s top residence-by-investment program for the third consecutive year. All these accolades coupled with a ballooning population and a regulated real estate market are key indicators of why investors should seriously consider investing in the region,” noted Ismail.
Other notable indicators include long-term investors’ visas and 100 percent business ownership. Zero restrictions on repatriation of funds and the availability of financing of real estate investments with local and international banks. Dubai’s rising number of economic free-zones is also seen as a boost to land and real estate investment.