Why you must mull buying property in Dubai this year VIEWPOINT
After an exacting year of 2016, the Dubai real estate market is expected to soften in 2017. However, Dubai prevails as the number one property market in the Middle East, while being ranked 23rd on a global scale, according to consultancy CBRE.
The market is likely to be buoyant and register growth, even at a slow pace, in 2017 and beyond. The government’s efforts to invest in infrastructure, the aviation sector and development projects make the UAE a safe haven for real estate investment. The country has also introduced tighter regulations for market transparency.
According to JLL data, supply of residential units will increase by an average four per cent per annum between 2017 and 2019, with 1,600 new units estimated to be completed in Dubai South alone by 2020 in the run-up to the Expo.
While forecasts stay conjectural at the moment, we can make some suppositions based on certain factors such as the convergence of a more mature and transparent market with relatively cheap prices compared to other major metropolitan areas.
Dubai is becoming an international hub for many people to live, work and invest. The constantly growing population will increase property demand and cause prices to go up over the next few years. This makes 2017 the best year to buy property in Dubai. The prices for prime properties in Dubai will eventually match those in Hong Kong, Monaco and London in upcoming years.
More space for less
Another factor to be taken into consideration would be the space on offer. An investor can buy 155 square metres of prime property in Dubai for $1 million. This is far more than in other major hubs such as Singapore, Sydney, Hong Kong, London or Shanghai. This has propelled Dubai into the top five cities that count for ultra high net worth individuals (those with $30 million or more in net assets), according to the latest Wealth Report. Dubai climbed three places in the 2016 rankings, from eighth to fifth place, surpassing Shanghai, Miami and Paris, while London snatched the first place from New York.
It is not yet clear how Expo 2020 will affect the market in the next three years, but this is a timeline that shapes up as auspicious considering that Dubai will face a reinforcement of Dh25 billion in government investment and 20 million visitors, leading to the creation of more than 277,000 new jobs that will attract expat talent and boost the affordable housing sector.
However, the government’s plan to introduce value added tax from January 1, 2018 in order to diversify revenues may have a short-term impact on the real estate market. If the agreed plan between GCC countries comes to fruition, the real estate market may be shaken for a few months in early 2017 on two levels — capital gain and rental income — before it starts picking up again.
As flustered as the next few years may sound, the real estate market promises impressive growth due to new laws and empowered regulatory authorities with impactful regulations for new and existing investors. This will not only help achieve growth in property investment but also eventually attract new global investors.