At present, the real estate industry in Dubai is experiencing its kind of hidden ascent. HIDDEN - BECAUSE THE MAJOR INDICATORS OF PRICES AND ACTIVITY OF BUYERS IN THE REAL ESTATE MARKET STILL DO NOT REMAIN ON THE HEIGHT, AND EVEN CONTINUE THE EXPRESSED DECREASE. HOWEVER, THIS REDUCTION IS AN APPOINTMENT OF GROWTH AND STABILIZATION OF THE MARKET IN GENERAL, CONFIRMED BY THE INCREASED FLOW TO THE EMIRATE OF INVESTORS FROM THE WORLD. Text: Helena Kryukova
Moreover, according to the Wealth-X report, in the coming years, Dubai may well surpass many other centers of business, cultural and social activity in the world that are tempting in terms of investment in real estate.
An oasis for millionaires
A joint report entitled "Luxury Residential Real Estate Market in Europe, the Middle East and Africa 2015", presented recently by the analytical companies Wealth-X and Sotheby's International Realty, revealed that 495 people have already invested in Dubai real estate a fortune of US $ 30 million or more, as well as 34 billionaires.
These figures characterize the size of the states of investors who are classified as super-rich. At the same time, prices for luxury real estate in Dubai are on average 40% lower than in London - the global "oasis" of billionaires. The share of luxury real estate, worth more than US $ 1 million, currently in Dubai is 8% of the total housing stock, and US $ 5.5 million is the average cost of real estate in this segment of the Dubai housing market. At the same time, the average cost of one square meter of luxury real estate in Dubai is US $ 9000. At the moment, it is still about 10 times less than, for example, in Monaco, the world capital of luxury.
In addition, Dubai is even more attractive to millionaires and billionaires by the concentration of many world records embodied in various real estate and infrastructure projects, including the world's tallest building Burj Khalifa and the most luxurious hotel in the world Burj Al Arab. Dubai is also an oasis of extravagant luxury, where, moreover, the sun shines 300 days a year.
Capital of Records
And as if specially in order to confirm the calculations of analysts by practice, at the end of summer, on the eve of the industry’s biggest event, the Cityscape Global 2015 real estate exhibition, a spectacular project of the Meydan One multifunctional complex was presented to the public in Dubai. The ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, took part in the launch of the construction of this mega-scale project. The project has become a major sensation in the real estate world of Dubai over the past few months: suffice it to say that it will unite several new world records at once - here will be located the tallest residential building in the world The One, the highest observation deck, and the longest artificial ski slope , and the new largest dancing fountain. 665 meters above the ground - at this height will be the world's highest observation deck with a 360-degree view, 3 million and 670 thousand square meters - this is the total area of the new complex as a whole, 1.2 kilometers - such is the length of the artificial ski slope, 60 of thousands of guests - the central square inside the complex can accommodate so much, 150 by 80 meters - these are the dimensions of the sliding roof that will be built over the complex to make it open in the cooler months of the year. In general, after the presentation of Meydan One, it immediately became clear that Dubai developers, if they can surpass this project, will not be soon.
However, no one is surprised by such an innovation against the background of other, equally extravagant projects, like the underwater and floating villas of The Floating Seahorse on the artificial islands of The World, an underwater capsule hotel and other futuristic novelties presented at the Cityscape Global exhibition, which was held in Dubai in September This 14th real estate exhibition has become the largest for all the years of its holding: more than 300 companies from different countries took part in the event, and the area and number of pavilions was increased by more than 30%. Two new exhibition halls were added to the main hall. Thus, since 2013, the number of halls at the exhibition has grown by 4 new pavilions, which in general is more than 40 thousand meters of additional space.
Among the giants of the Dubai real estate market, Cityscape Global 2015 once again featured such large Dubai companies as Emaar, Dubai Properties, Dubai World Central, Meydan, Meraas and Nakheel, as well as DMCC, Majid Al Futtaim and Al Barari. Choosing visitors to the Cityscape Global exhibition really was something. The success rating of Dubai developers, compiled by Standard & Poor's, showed that the expected decline in property prices in Dubai in the second half of 2015 is unlikely to have a negative impact on their performance and economic performance. It is expected that residential property prices in Dubai may fall even before the end of the year, however today all the leading developers of the emirate have created for themselves a reliable "rear".
According to analysts, the current year in Dubai will be one of the most “fruitful” for real estate projects in various categories. According to Reidin, in 2015, the Dubai real estate market will replenish with 20,170 new properties, although over the past three years the average annual figure for this amount has usually been 11,600. The abundance of new offers and new off-plan real estate sales schemes allow developers to sell such housing on 20% cheaper than secondary real estate, which, in turn, has forced owners of secondary housing to lower prices too - by an average of 15%. The indicators of the first half of the year in the reports of analysts testified to this and much more.
The first half of 2015: results and prospects
For the first half of 2015, the total amount of real estate transactions concluded in the emirate reached US $ 17.4 billion. About two-thirds of real estate transactions in Dubai were concluded using funds provided by banks, which is also a criterion for the healthy functioning of the system, the statistics noted. However, returning to the issue of market “productivity”, not all analysts share the same opinion regarding the influence of this factor. For example, Cluttons analysts admit that 40,120 new properties presented by Dubai developers since the beginning of 2015 can change the market exclusively in the long term. It will take at least another 10 years to build all these houses, and if the population of Dubai grows at that rate during this time, then demand, accordingly, will always be almost equal to supply.
Affordable Housing
Another important point that all analysts noted in their reports for the first half of the year is the issue of the availability of new real estate, since its lion's share falls on this particular segment. The areas in which this affordable housing is being built are located primarily on the periphery of Dubai. These are locations such as Dubai Silicon Oasis, Dubai World Central, IMPZ, etc. Prices here are for middle-income buyers and, more importantly, for real end-buyers. The main thing that happened in the first six months of 2015 is that the developers shifted their focus from rather narrow segments of elite housing and retail real estate to other segments of the real estate market that require support, in particular, affordable housing. And in this sense, it is important to understand that today real estate in Dubai is one of the most relevant "anti-crisis" options for placing free funds for investors around the world, and especially from countries where local currencies are subject to significant fluctuations in the exchange rate. Moreover, buying an off-plan housing in Dubai is becoming easier and more profitable: it is now possible, having paid only 5% as an entrance fee and 70% after completion of construction, to become the owner of high-quality housing in an area with developed infrastructure.
Therefore, it is not surprising that the figures from the Land Department report indicate a high level of confidence of both foreign and regional and local investors in the housing market in Dubai: 19,848 investors of 142 different nationalities have invested US $ 14.4 billion in real estate over the past six months.
The positive nature of the prospects for further market development is also confirmed by a survey conducted by the London Business School. According to this study, 47% of the businessmen surveyed will not change their plans to invest in Dubai real estate, and 84% of the 200 respondents are confident that Dubai will not face a serious decline in development and falling prices in the near future.
Favorable market paradoxes
The volatility and unevenness of average price indicators in the segments of sales and rental of real estate in Dubai have also been among the most characteristic signs of the market in recent times, often creating paradoxes that are beneficial for buyers. And if in general, prices in the sales segment fell, according to Bayut, by 5-10%, and in the rental segment - by 5-6% per year, in some areas the rental price, on the contrary, increased by half 13% over six months. And all thanks to the expansion of the market itself. Thus, a favorable paradox emerges, first of all for real estate buyers: the more the cost of housing and its rental falls, the more developers and landlords are oriented towards affordable housing, and affordable housing creates increased demand for it, which, in turn, causes rising prices in the rental segment. Here is an example of such a paradox: according to Tasweek, the Dubai Silicon Oasis and Discovery Gardens districts took second and third places in the ranking of the most affordable real estate for rent in Dubai.
But at the same time, according to Bauyt, in the same areas over the past six months the most significant increase in rental prices was recorded - by 13%. And other analysts, including Knight Frank, Asteco, Bayut and the Dubizzle portal, noted a decrease in prices for the sale and rental of premium housing over the past six months in Dubai.
The most noticeable decline was in the most popular area of Dubai Marina, where prices for elite expensive housing fell by 18% in three months, according to the portal Dubizzle. However, the decline in prices for luxury housing was as uneven as fluctuations in the price level for various segments of the Dubai real estate market as a whole. Studios became cheaper in some areas, while in others, on the contrary, large apartments with three or more bedrooms.
Thus, those housing prices in Dubai that continue to decline were initially too high, and the market is simply adjusting itself, but nevertheless, according to the IMF's mathematical calculation, buying an apartment in Dubai is now really more profitable than renting. In general, according to experts and according to the theory of "aging", the Dubai real estate market over the past two years has gone through a kind of mini-development cycle from the peak of 2014 to price stabilization. And if the next phase of its development cannot offer investors such quick profits as the “pioneers” of the market took advantage of at its dawn, then, in any case, it can certainly offer all the advantages of stability and true maturity.
For more information about purchasing and managing real estate in Dubai, contact IMEX Real Estate at tel. in Moscow +7 495 5100008, toll-free number in the UAE 800-IMEX (800-4639) or by sending a request by e-mail info @ IMEXre.com.
