_Hot topics for real estate investment in Dubai
What is the outlook for Dubai?
The story of Dubai is clearly one of growth of the economy and the property market. In the last two to three years, the residential and commercial markets began to slow, and the wider regional economy was weakened slightly because of shifts in the oil markets, which ultimately affects wealth creation.
The question now for investors is, where will the growth come from? A lot of future growth is related to the Dubai’s governmental plan: the 2021 Vision. This is leading the shift into higher value added services, which impacts upon the future development of offices, logistics and other commercial assets, and on the back of this, therefore a demand for residential property.
Which countries are investing in Dubai?
It is perhaps easier to answer which countries are not investing in Dubai. In the City Series report, Knight Frank notes that there are over 200 different nationalities investing in Dubai. Therefore, when you consider the number of nations in the world, there are very few that are not. Moreover, this trend far outstrips what we are seeing in London and New York. So as a destination for global wealth, Dubai has a greater diversity for interested parties than anywhere else. In addition, thanks to infrastructure, connectivity and education; plus key drivers such as lifestyle and safety, Dubai is very well positioned.
How has investor sentiment changed towards Dubai over the past five years?
5 years ago, we would have been able to identify 12 or 15 locations where the world’s high net worth community wanted to invest. This has now shrunk due to economic crisis and government intervention and therefore the choice for the rich investor has reduced to a handful of places and Dubai is now very much at the forefront of this.
Dubai compares very well with other cities and the variety of nationalities investing are very significant, but the interesting thing for Dubai, unlike New York or London is that Dubai is still a growing, maturing market. For example, neighbourhoods in Dubai are changing rapidly and becoming much more diverse. One of the interesting things for Dubai, as an evolving city is that some locations over the past few years have weakened in terms of demand, whilst other locations have come to the fore, an example of which is The Palm, which is certainly one of the strongest locations within the city.
How has Dubai remained competitive in a global context?
Dubai has been very clever in stating its vision, which is very exiting when compared to two of its strongest competitors (Singapore and Hong Kong) who through government intervention have dampened down their markets significantly. Australia and New Zealand are other examples where their governments have intervened making it very difficult for foreign investors to enter the market. Dubai's position as a very open city for investment is taking this opportunity to capture a lot of this potential investment.
In regards to pricing, Dubai looks very attractive when compared to its global competitors, but it must be remembered that it is still a relatively developing market, which has seen both positive and subdued activity and therefore needs to price itself competitively to attract investment. Dubai is growing rapidly, market volatility comes with the territory and with it each cycle becomes less volatile over time as the market matures.
Is Dubai a safe haven for investment?
Ten years ago, Dubai was seen as a glamour holiday destination, but through its intelligent philosophy and vision, it is now focusing on technology, education and transportation to become a global leader. Plus acting as a major hub for inward investment for the region, Dubai is seen as a safe haven both at broader and global level.
How accessible is Dubai to global investors?
It is widely known that Dubai is a transport hub and connects very quickly with a third of the world’s population within 4 hours or two thirds of the population within 8 hours. But the exciting thing for the future is that to the East we have Asia and the west is Africa who are looking to emerge strongly over the next 10 years and Dubai is superbly positioned as a central hub.
What aspects of Dubai’s property market make investors potentially cautious?
Where an investor may have doubt is in the market cycles and because Dubai is still a developing market, there is a need to understand that there isn’t yet a great depth of historical research available. So if you’re taking a short, medium or long-term investment view you need to try and understand cycles and market movements. If you are looking at Paris, New York or London there is much richer market data and for Dubai without the depth of research or transparency, it can become hard to know where you stand.
How important is style and functionality to the end user in Dubai?
Within either a local or a global context, it is a very competitive market and brands have to stand out in a number of ways. Not only the offer and quality of the product, but also in terms of its design. One of the great opportunities is that Dubai still has the luxury of space. For example, one of the best schemes in New York has to go up 85 floors on a very small footprint. Which works beautifully in some ways but has its restrictions. The great thing about Dubai is that it still has the ability to offer a scheme that is all encompassing in terms of facilities and security. However, in terms of lifestyle and particularly the family element, Dubai is immensely attractive.
What is the current sentiment for global investors?
The global perspective on wealth has a background of political intervention and uncertainty, but there is a greater velocity of wealth moving around the world looking for markets in which to invest. The Dubai City Series report informs not only the Knight Frank business but most importantly our clients, where to invest and within which asset classes, not only for the now, but also for the next 10 years.
The implementation of The Wealth Report, 10 years ago, came about because no one was really looking at property within the wealth context, and the subsequent launch of the City series has allowed us to take a deeper dive into cities such as Dubai.
What insights does the Dubai edition of the Wealth Report City Series offer investors?
The Dubai City Series edition of the Wealth Report is valuable as it offers investors more certainty around opportunities within a global context, and it this type of research that Dubai needs more of to build it into a mature market, to become competitive with either New York or London