Is It A Good Time To Invest In Dubai’s Property Market?

Steven Morgan, head of country, Cluttons UAE and Paul Preston, director and head of Middle East, IP Global, lead the debate.



Yes: Steven Morgan, head of country, Cluttons UAE

The rise and fall of the Dubai property market has been well documented over recent years with much focus still on the fall in values and the financial pain that many individuals and organisations alike suffered.

However, times are changing and Cluttons is seeing increased levels of interest and activity across most sectors of the real estate market.

Interestingly there has been increased interest from our regional network of offices and from clients in other GCC states such as Bahrain and Oman.

With certain master planned schemes maturing, occupancy levels increasing and banks back in the market to lend (and at more reasonable rates too),there are certainly opportunities for the informed and educated to make reasonable returns from the Dubai property market.

Real estate is generally not a liquid asset, which combined with the relative high costs associated with buying and selling real estate in the UAE, results in investments lending themselves to a longer life cycle with a planned future exit strategy. This is in contrast to the flipping mentality that was seen in the heady days of 2006 to 2008.

However, warning must be given that the market is not back in its entirety and cautious investors will benefit from a careful and considered approach backed by good advice from a reputable property professional.

The market is maturing and location is the key.

Rents and values are steadily increasing in some of the more mature and well supported master planned schemes, but there are still developments which lack infrastructure, critical mass, shops and services and in these locations, rental and freehold prices are likely to struggle and at best stay level over coming years.

No: Paul Preston, director and head of Middle East, IP Global

The Dubai real estate sector has always been an interesting proposition and currently there is renewed investor faith in the market.

Historically the prices increase and decrease rapidly in Dubai and with another 35,000 units set to hit the market within the next 18 months, IP Global feel that there are stronger markets such as London, Kuala Lumpur and New York which offer strong yields and sustained capital growth over the mid to long term due to the under supply of quality property in these key investment cities.

The Dubai property market has seen price increases of 100 per cent within 12 months in years gone by, but sadly, such properties have also decreased by the same amount in the years to follow, highlighting the difficulty to enter the market at the right time. Personally I have seen many clients lose huge amounts of money through buying into certain properties in Dubai, at the wrong time and with recent price hikes, I do not feel that now is the ‘right time’ for investing in Dubai.

IP Global focuses on investing in and offering our clients property assets in key markets where we are extremely confident that our clients will make a consistent return as well as a solid rental yield. A huge amount of research and due diligence goes into each project we offer to our investors, underlining why markets such as Kuala Lumpur, New York and London are serious property investment opportunities.

Historically, markets such as London and New York show strong returns in each 10-year cycle since records began and we constantly hear reports highlighting the undersupply in properties and lack of buildable space within these key cities, which will keep driving the property prices and the yields upwards.

IP Global will continue to watch the local UAE market very closely, but at this moment in time we feel there are other global property markets that offer our clients a more secure property investment opportunity.