Dubai Real estate market trends to watch in 2019
2018 was a year of several significant initiatives designed to invigorate the Dubai and UAE real estate sector. Legislative changes, new visa rules, the launch of several new prestigious developments and the approaching Expo 2020 event, were all catalysing influences. The announcements of a ten-year residency visa for expatriates, five-year renewable retiree visa and the 100% foreign ownership of companies, in specified sectors, are expected to have a far-reaching effect on the economy and global integration of the UAE.
As the country’s most prolific and dynamic commercial hub, these changes are also expected to drive a heightened interest in Dubai properties. For example, one of the options expats can explore, in order to qualify for the retiree visa, is to purchase property worth AED 2 million in the UAE. Not only are the new rules likely to promote an influx of foreign businesses, professionals and investors, but the greater sense of permanence resulting from these measures is also expected to boost property ownership among non-Emirati residents considerably.
The year 2018 also witnessed a proactive engagement between Dubai and prospective real estate investors from around the world. The DLD organised several international events, including prestigious property shows in Shanghai and Mumbai. In addition, Dubai also hosted the Dubai Property Show, the inaugural Proptech Middle East event and the Cityscape Global event. 2018 also saw some fears of oversupply dampening the bottom-line performance of the market somewhat, but the continuing buyer’s market has drawn significant interest from the entire gamut of Emirati, regional and expat prospects, as well as international investors from several countries. In terms of rentals, the DLD recorded 2,081 transactions in Dubai between the 17th and 30th of December 2018, which amounted to a remarkable AED 19 Billion in value (1). If one were to characterise the industry mood leading into and through the first quarter of 2019, it would definitely be optimism balanced with a measure of caution. And Q1 in 2019 has exhibited much of the sentiment of the previous year, with the market continuing to be bullish on long-term prospects.
The positive outlook of the previous year has gathered more strength in 2019
The present subdued property pricing in UAE is being seen as an attractive proposition by many investors. 2017 saw the market driven substantially by the off-plan segment, while in 2018 developers offered buyers incentives such as DLD fee waivers and innovative post-completion payment plans. There is some speculation that 2019 could see the UAE central bank increasing the approved loan-to-value ratio resulting in a larger buyer pool that will be further enhanced by attractively priced completed properties coming to market. With a more diversified economy maturing, an influx of young professionals to the UAE is set to increase the number of first-time buyers taking advantage of a favourable market. At the same time, rent-to-own arrangements are beginning to add yet another buyer friendly option to the mix.
Gemini Property Developers CEO Sunil Gomes believes that this favourable buyer’s market is especially significant in the context of the positive international assessment of the UAE’s macroeconomic prospects. The UAE rose ten places in the World Bank ‘ease of doing business’ list, in 2018(2) while the World Economic Forum ranked the country 27th in its World Competitiveness Report(3) for the year. In Sunil’s opinion, these bullish prospects for the larger economy make the very competitive offers, which real estate investors can take advantage of in Dubai, especially lucrative. Sunil believes that an increase in demand due to the approaching Expo 2020 and an expansion in the affordable segment will also contribute to the long-term growth of the Dubai real estate market.
Innovation and anticipated demand will drive growth across multiple segments
The Dubai administration is driving a multi-pronged reinvention of the local economy. Several synergistic trends and the city’s inherent ability to embrace innovation are creating a positive space for the Dubai developer community to leverage proactively. Deloitte’s insightful ‘Middle East Real Estate Report: Dubai 2019’(4), issued recently, identifies the below as the most formative influences for the year across various segments of the industry:
- Hospitality: With the number of tourists visiting Dubai looking set to expand further, the city’s hospitality industry is diversifying to include more affordable options as well. The real estate market is expected to be stimulated by the demand for establishments that offer high-quality occupant experiences at competitive prices. This diversification will reinforce Dubai’s status as one of the most competitive hospitality markets in the world, adding to the expansion already underway due to the approaching Expo 2020.
- Residential: While the residential properties market is currently under the influence of an oversupply, a firming US dollar, economic pressures in key investor markets, the long-range market fundamentals hold the promise of soon to be unlocked growth. With the diversification of commercial activities, an influx of professionals and growth in long term expatriate populations, several as yet untapped sources of demand look set to support robust growth in the residential properties market.
- Office Space: Legislative changes allowing 100% foreign ownership of businesses look set to drive a growth in Dubai’s corporate offices market segment. As an important regional commercial hub, as well as a gateway connecting the east to the west, Dubai offers corporations the ideal location to expand and consolidate their presence. The new regulations will create a space for a more multi-tiered corporate presence, adding further positive impetus.
- Retail: A more nuanced approach is beginning to emerge, in the aftermath of the initial adoption of digital transformation and e-commerce, within the retail sector. Customer activity is evolving towards a preference for an omni-channel experience. While e-commerce is likely to continue to expand, there is a resurgent trend in physical outlets that cater to a tactile experience of products, as well as acting to reinforce brand identity. Dubai’s well-earned reputation for striking retail outlet experiences is likely to drive reanimated expansion in this segment, through 2019 and beyond.
- Infrastructure and Logistics: Growth and diversification in the role of the UAE, as a globally integrated and regionally pivotal center for trade, continue to be a strong influence in industrial logistics. Expanded public and private investment into infrastructure; a positive response from multi-national corporations; supportive legislation; and energetic preparations for the Expo 2020 event are all keys to the continued growth in the infrastructure and logistics segment.
Across all the core segments that constitute or strongly influence the real estate market, Dubai offers the astute investor with the perfect combination of assured long-term value and a highly buyer-friendly current scenario. Sunil also maintains that Dubai presents opportunities that investors of all types would find lucrative. From high volume institutional investors to professionals keen to be part of the city’s enthusiasm to expand, innovate and redefine, there is good reason for interest from all sections of buyers. Sunil believes that while increased global integration brings some influences beyond local control, the consensus is that Dubai is taking the right approach to long-term prosperity. In Sunil’s opinion, it is these big picture positives that ensure investors view temporary slowdown in value as a reason to buy, rather than as a dampening influence to market sentiment.