Dubai property prices are competitive globally
Dubai has witnessed steady overall growth and rapid progress in property sector since 2000. Dubai's current developmental phase is expected to last more than a decade. This growth has had a progressive effect on all parts of the economy. Surprisingly, Dubai's property prices are economical.
The current prices of apartments in Dubai average US$ 3980 per square meter. Upon analyzing the current price index of properties in Dubai, we find that the prevailing figures are much lower than prices in more established markets like the US and the UK. Moderate rates imply alternative opportunities for investors on the lookout for every-day residents rather than high earning expatriates and locals.
Realty prices in major metropolises of the world and Dubai
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The rate of price appreciation in Dubai during the last 6 years has been substantial. In some residential segments like International City, prices have increased by 200-300% since their launch in 2002. The Dubai commercial real estate sector has grown along similar lines. We anticipate a 30-35% hike in the prices of offices in 2008/09. The Dubai International Financial Centre (DIFC) boasts the highest prices for offices in the emirate, the average rate being US$ 12,668 per square meter. Unlike Dubai which is experiencing a real estate boom, many markets including USA and UK (in general) have witness either stagnation in property prices or a depreciation. In 2008, UK family homes extended their slide, falling 30%.
The decline in the UK could be attributed to high
output and rising prices of properties. Indian realty is also starting signs of
stagnation, the reason being inflation and low purchase parity.
But in Dubai, despite the rising
construction and labor costs, the outlook is positive; demand is high and output
beats demand. This trend is expected to last beyond this decade.
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Dubai real estate
industry and Hedge Funds
A Hedge Fund is a private investment fund is open only to
qualified investors; the Hedge Fund activity in the public securities markets
of the Middle East has grown substantially in
recent years. The Escrow Account Law issued by the Government of Dubai in late 2007 has ignited a massive inflow of institutional funds into Dubai real estate and the UAE at large. The new law has bolstered confidence in the real estate market and many major institutions overseas are seriously considering investments in Dubai realty. The rental yield in Dubai is very attractive when compared to developed markets. Currently Dubai boasts a rental yield of 10% as against United Kingdom's 2%. To strengthen the local economy further, capital market regulator Esca (Emirates Securities and Commodities Authority) plans to tighten brokerage laws by requiring brokers, including realty brokers to segregate their proprietary accounts and client accounts. The new move follows the US recession which could affect world markets, including Dubai real estate. |
