By Hussain Sajwani, Chairman, DAMAC Properties
‘Dubai is a great place to invest in’
While the above statement has held true for decades, our understanding of it continues to evolve. Dubai’s real estate sector is a prime example of its superior position on the global investment landscape.
In 2017, Dubai witnessed 69,069 real estate transactions with an overall value exceeding AED 285 billion (USD 77.6 billion). Out of those 69,069 transactions, 52,958 were deemed to be made by investors, of which 65 per cent were foreign. This ever-growing international interest in Dubai’s real estate has also been observed in a recent global report titled ‘World Cities: Mapping the Pathways to Success’, by Jones Lang LaSalle, the global real estate advisory. In the report, Dubai is listed among the top destinations for Foreign Direct Investment in the world.
So, what makes Dubai so attractive to the global investor?
LET’S TALK RETURNS
When it comes to purchasing real estate, the most important aspect is the return on investment. Rental income makes up the major component of returns as it brings immediate revenue, unlike capital appreciation. Despite the recent slowdown in rents and property prices, Dubai continues to offer attractive rental returns on properties. A report by property listing site, Bayut.com, highlighted average rental returns of seven per cent on apartments and five per cent for villas in Dubai in 2017, which places it among some of the best performing cities in the world. This high return on investment continues to strengthen investor confidence.
A STRONG REGULATORY FRAMEWORK
Dubai’s transparent regulatory environment offers security and protection to investors. The Dubai Land Department (DLD) has developed a robust legal and regulatory infrastructure to ensure the best practices at all levels of the real estate sector, including marketing, brokerage, sales and purchase activities. The DLD also ensures timely delivery of properties. Earlier this year, the DLD announced various new initiatives to support Dubai’s economic diversification strategy by establishing the emirate as the world’s leading property destination. As part of its initiative, the DLD is now developing a new mortgage and finance law aimed at further encouraging inbound international investments.
EYES ON THE FUTURE
Dubai is a city that employs innovation in all aspects of governance, which has led to high levels of transparency and ease of doing business. In a recent move aimed at strengthening the position of Dubai as one of the world’s best destinations for real estate investment, the DLD announced the launch of a global virtual real estate portal that will allow investors to transact online from anywhere in the world, eliminating paper documentation and the need to go to physical offices. Once live in 2020, the portal will not only reduce the cost of doing business, but also give investors more control over their investments.
THE VERY SPIRIT OF DUBAI
Dubai is synonyms with excellence. Backed by visionary leadership, the city keeps developing in terms of infrastructure, appeal, and even adoption of emerging technologies. The space programme is taking shape, and big investments have been made in the service and knowledge industry. Dubai is even on its way to become the first city to run on Blockchain technology. The city has evolved into a hub for innovation, attracting investors and businesses alike to take advantage of what’s to follow.
Coming back to the question – what makes Dubai so attractive to global investors? While promising ROIs and a robust regulatory framework are key factors, Dubai has so much more to offer. Beyond the numbers, vibrant Dubai is a haven for dreamers and innovators; and while a financial investment is mainly valued in terms of returns, its worth is rooted in the human desire for real growth. The city is known for its ability to turn imagination into existence. No matter what challenges present themselves, Dubai’s spirit of modernisation and its element of surprise always represent implicit promises of future returns.