The UAE’s real estate market has rebounded significantly since the financial crash, with property prices rising by the highest rates in the world last year. That property boom has attracted investors looking for profits as well as a safe haven. Last month, a hotel opportunity attracted the ninth highest number of enquiries on TheMoveChannel.com, the most any listing in the UAE has ever received.
Student property remains one the most sought-after sectors, accounting for three of the top 10 listings. The UK continues to be the biggest driver of student property investment, with activity focused on regional cities such as Birmingham. The most popular property listing in April 2014 was a student development in Bradford.
A variety of listings offering strong rental income, from Florida villas to a UK apartment, accounted for another three, highlighting that buy to let investment has a truly global appeal. Indeed, a flat in Istanbul offering 5.5 per cent NET rental yields generated the eighth highest number of leads. Property in Turkey last appeared in TheMoveChannel.com’s top 10 in July 2013, a sign of rising confidence in Turkish real estate in 2014 following recent unrest.
An oil drilling programme in the US generated the second biggest response, thanks to its low entry cost of £6,500; the alternative investment is far more affordable compared to the other real estate products in the Investment Watch top 10, which range from £35,000 to £367,050.
Affordability is not the only priority, though: buyers are also looking for stability. Dubai was home to the most expensive listing in May’s top 10, but confidence in the emirate’s booming market was strong enough to win over investors regardless with the prospect of rising prices and strong rental income.
Karl Ormerod, of Elite Realty Dubai, explains that Dubai real estate is stable, thanks to recent government action to minimise any risk of a bubble: “RERA (Real Estate Regulatory Authority) is the government body who is constantly looking to improve how the Real Estate market is governed and has recently has slowed the habit of ‘flipping’ off plan by adding a 4% ALQUOD tax, which has to be paid immediately, whereas before as soon as a contract was paid your you could resell at a premium for pure profit and little outlay. This tax is encouraging end users and buy to let and, in turn, people are purchasing less units per person than they used to.”
The organisation is “keeping an eye on the market and will do everything in their power to stop a crisis”, adds Ormerod.
For those investing in the market, rental income is high, he says.
“As long as you’re are not asking above market price rental returns can be as high as 15%, with hotel suites on offer at present expected to reach nearer 20% as hotel occupancy levels here are, on average, 87%. With winning EXPOP2020, they are expected to be even higher.
He argues that off-plan opportunities, such as The World Islands, Dubai, are the best value for money: “Off-plan offers the best value for money at the moment with some great payment plans and construction here booming again. With EXPO 2020, Dubai will be a showcase for the world to see so the majority of construction is expected to be completed within 2 years of the EXPO 2020.”