High Yield Advisors (HYA) expects a stronger real estate market for Dubai in the coming years due to unlimited opportunities that are becoming available for investors.
Home to over 200 nationalities, Dubai has become one the world’s most diverse places to live and work and has ultimately become a real estate investment destination for people from all over the world.
“Dubai has always been an area of interest for investors, particularly because of its high return on investment. With increased development in its legislation and because of its diversified offering Dubai will always set itself apart and investors should be confident.” Quoted Patrick Parmeggiani, HYA.
HYA outlined some key trends in which investors should watch out and which could help investors decision and thought process for 2018.
The recent release of the budget confirms to the strong financial plans in place from the Dubai government. There was a 20 per cent rise of spending in 2018 compared to an average rise of eight per cent across last five years. The sharpest incline was in infrastructure expenditure, driven predominantly by construction projects associated to the World Expo 2020 (more than a 40 per cent increase). As Dubai continues to pump money into the system, we can expect to see a positive multiplier effect across different sectors of the economy, particularly in real estate and financial services.
“Developers continue to release projects on the outskirts, this extending the boundaries of the city, the residential areas continue to grow at a fast pace.”
A common question been asked amongst investors is whether prices have stabalised or will they continue to fall in 2018. In 2017, city-wide prices fell around 3 per cent, comparative to 8% the previous year. The decrease in rate of change is a positive sign that prices have stabilised throughout the market. Additionally, prices in some areas have seen an increase in sales price; such as Jumeriah Lake Towers, Dubai Marina and Sports City. However, investors should remain mindful that unlike price falls, recovery is a gradual and continual process in real estate assets.
The oversupply fallacy
Another hot topic which was an area of wide debate among investors and advisories was the fear of oversupply. As 2017 ends, analysts estimate that 34,000 units will be delivered into the market, on the other hand, only 65 per cent of these have been completed. 2018 predicts a further 70,000 units will be delivered. Though, a revised forecast considering cancelled, stalled and delayed projects discloses that we should expect only a 44 per cent completion rate. Therefore, this suggests that the fear of an oversupply is speculative, especially against the expected population growth rises on the verge of Expo 2020 attraction and new businesss opportunity.