The dubai property market has always been the litmus test for the overall success of the emirate. It drives consumer confidence, the stock markets and the banking industry.
From late 2008 through until the start of 2012, the Dubai property market saw a downturn in valuations, after many years of impressive growth. It is worth noting from the start that this downturn was not a result of a lack of confidence in Dubai’s real estate industry, but as a direct reaction to the turn in international money markets and a global financial crisis not seen for more than fifty years.
As global markets start to correct, investors are returning in strong numbers, with prices in Dubai increasing across the board, especially in prime locations such as Dubai Marina and the Burj Area.
Investor protection in the Dubai market is the most stringent in the region as off-plan sales are registered and highly regulated through RERA, the Real Estate Regulatory Authority. Developers must have in place agreements with main contractors, Escrow provisions with at least 20 per cent funding and appropriate licences with the authorities.
Recent independent reports have shown that valuations grew by as much as 20 per cent in Dubai’s luxury apartments over the course of 2012 and this is set to continue throughout this year and into next. While I remember a time when prices grew by as much as 20 per cent a month in the heyday, this is now a more sustained growth pattern which investors, and those ‘buying to live’, can take reassurance in.
And Dubai continues to expand. There is no limit to the aspirations and desire of the country’s leaders to build a unique environment, which stands shoulder to shoulder with any country in the world. The government is making huge strides towards its vision of being among the best countries in the world by 2021 — the Golden Jubilee year — with recent announcements including the opening of the new A380 concourse at Dubai Airport and the massive Mohammed bin Rashid City with more than 100 new hotels, theme parks and shopping malls. This vision, supported by delivery, provides the clearest justification that Dubai is here to stay, and with it, the property market will thrive.
We are seeing that there is a move towards luxury developments within the most desirable locations. Clients are looking to purchase property in places where infrastructure is already developed, including local shops, schools and road networks. Investors are also demanding high-end finishes and unique interior design, to really identify themselves in their property.
Branded residences are proving immensely popular and a recent report by Knight Frank found that projects in the Middle East, which are associated with luxury brands are demanding nearly 60 per cent more value than non-branded projects in the same area.
This, combined with the flexibility available within serviced hotel apartments, will be the main driving force of the Dubai property market in the next three or four years. Branded serviced apartments allow for clients to enjoy the service standards exceeding five-star hotels, while having the option to earn rental returns on the property if they are away for any prolonged period of time. As this new asset class comes online, the Dubai real estate market is set to stay strong and continue to outperform the money markets. As I said at a recent Press conference to launch our new projects: Damac Residenze in Dubai Marina and Damac Esclusiva in Riyadh both in partnership with Italian fashion house, Fendi, ‘now is the time for business suits and hard hats!’ What I meant by that was that it is important that property developers in Dubai take a leadership role in instilling trust into the market and only bringing new projects and living experiences to the market when construction is already well under way.
The shoots of growth are a positive sign in the market place and the return of confidence, combined with strategic legislation, will ensure that Dubai will remain one of the most desirable places in the world to own property.
The writer is the managing director of Damac Properties, the region’s largest luxury property developer. Views expressed are his own and do not reflect the newspaper’s policy