MidEast investors eye Dubai property - JLL

European cities including Paris and London also on radar for regional investors, says report

Dubai’s property sector is the most popular asset class for Middle Eastern investors buoyed by its improved economic outlook, stable political situation and recovering rental and values, a report said.

While the emirate is the most popular asset class regionally, European cities such as London and Paris remain hotspots for Middle Eastern investors looking to buy into real estate outside the region, Jones Lang LaSalle (JLL) said in its investor sentiment survey.

“Middle Eastern investors prefer Dubai as investment destination in the MENA region with sentiment towards the emirate improving significantly over the past 12 months,” said the report.

“While the real estate market has lagged [behind] the overall economy, there are now increasing signs that the sector is recovering, at least for selected prime locations. Investment activity and prices are rising, particularly in residential and hospitality sectors of the market,” it added.

Dubai’s property sector, which was hit hard by the global economic downturn in 2008-2009, is starting to show some signs of recovery. Apartment prices increased 5 percent in the second quarter compared with six months ago, according to Knight Frank's quarterly prime global cities index.

Investors have shifted their focus from off-plan property to completed real estate in the wake of Dubai’s property crash.

“As MENA markets mature, they [investors] are placing more emphasis on implementing medium to long-term strategies as opposed to opportunistic, sporadic buying behaviour,” noted the report.

“Dubai-based investors are particularly focused on income-producing assets. The situation differs a little in Saudi Arabia where most of the family offices and high net worth private individuals have large land banks on their books at historical values and are therefore more willing to take development risk,” it added.

Saudi Arabia is the second most popular destination regionally, followed by Abu Dhabi. Increased geopolitical stability in Egypt is boosting investor sentiment and is expected to start attracting regional investors “providing that political and economic stability continues”, said JLL.

Europe, with its political stability and strong legal system, has continued to attract regional buyers. Middle East investors purchased US$5.3bn worth of property outside of the Middle East during the first nine months of 2012, more than the whole of 2011.

London remained the most popular city to invest in with Middle Eastern buyers snapping up US$2.3bn worth of property between January and September, more than double the amount purchased during the same period last year.

Major real estate investments in the capital included Qatar Investment Authority’s US$527m purchase of the Credit Suisse headquarters in Canary Wharf. Regional investors also continued to snap up property in other European cities, most notably in Paris and Budapest.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

Posted by: John Doe

there's no limit to the entertainment in this region!

Posted by: Red Snappa

May I ask what happens when all the Abu Dhabi government employees currently commuting to the capital from Dubai daily, are forced to relocate to the emirate of their employment, deadline September 2013 I believe? How good an investment will that property be then?

The more house prices and rents rise in Dubai the more expensive it becomes and less attractive, if it stayed exactly where it was it would make more money.

As a property investor, you really cannot do better than Spain right now, it is a mathematical no brainer, e.g end three-bedroom, 3 bathrooms golf-side, townhouse = euro 110k (AED 527k).

Europeans because of the various austerity programmes in place are abandoning long-haul flights and opting for the closer-to-home-just-as-warm destinations and renting apartments. Spain is the perennial favourite amongst British, Germans, Dutch, Belgians most Scandinavian country nationals, Poland, Czech Republic in fact most of the EU. 502 million people is not a bad catchment area!

Posted by: Special K

Red Snappa, when overnight your taxes double/tripple due to municipality increases as a direct result of the state/fate of Spain is not too different from Greece and it simply won't be able to fund itself, you may wake up feeling less smug. Go where the money is and Dubai, Abu Dhabi, Saudi have plenty of wealth to weather any storm as has been seen.

All comments are subject to approval before appearing

Further reading

Features & Analysis
Trading bricks: The growing popularity of real estate investment trusts in the Gulf

Trading bricks: The growing popularity of real estate investment trusts in the Gulf

Investor interest in real estate investment trusts (REITs) has...

Abu Dhabi real estate: Down, but not out

Abu Dhabi real estate: Down, but not out

While there has been evidence of rents in the richest emirate...

Forgotten fees: the challenge of investing in Dubai property

Forgotten fees: the challenge of investing in Dubai property

Investors attracted to low service charges at some Dubai residential...

Most Discussed