Where Is Dubai’s Real Estate Headed?

Where Is Dubai’s Real Estate Headed?

Where Is Dubai’s Real Estate Headed?
(Shutterstock)

There is a reason why they call Dubai a cosmopolitan city. No matter where you come from, you would find the city welcoming you with open arms. By way of creating new opportunities for job seekers, the city also attracts the world’s youth, come here in great numbers in every year to find employment and to settle down.

Little wonder then that the demand for property in this city has been growing year after year. In the times to come, Dubai is in fact expected to have the highest Generation Z to Generation X population ratio among global cities. Dubai is certainly living up to its tremendous potential.

Where is the city headed?

Dubai is the centre of international markets, and is a common ground between the East and the West. Keeping the Dubai Expo 2020 in mind, the government has also been spending generously on boosting infrastructure. This is helping Dubai real estate to grow. However, this is not to indicate that there is an absence of challenges.

The strengthening US Dollar, the declining rentals and the introduction of the value-added tax (VAT) are hitting the residential sector hard, somehow turning investors passive. There is a downward adjustment in rents when it comes to the residential investment market. The affordability issue is one of the reasons for the market becoming tenant-friendly. Discounts, incentives and wider options along with more properties in newer areas have favoured tenants.

Experts caution that rental yields might fall further in the wake of increased supply.

The road ahead

In the past couple of years, the Real Estate Investment Trusts (REITs) which provide opportunities for individuals to invest in diversified income-producing properties without ownership like hospital or office space, witnessed rapid expansion in trading. This, analysts contend, has a direct relation to high-profile acquisitions. As an instrument of investment, for both retail and institutional investors, Reits are expected to grow and provide opportunities to both small investors to look for diversified investments in properties as well as help increase funding opportunities for developers.   

Last Updated: Wed May 23 2018

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