2013 - The Year of the Savvy Real Estate Investor?

December 17, 2012

2012 Saw Dubai’s Real Estate Market Back on an Upward Curve; Opportunities Abound in 2013 – with a more Considered and stable growth plan

Dubai's property market will grow at a steadier and more stable pace over the next year, providing solid investment opportunities for the savvy investor, says leading executives in the industry.

Independent reports have put the growth in prices of real estate in Dubai through 2012 at anywhere from 7-19 percent, depending on location and the quality of the project.

Ziad Al Chaar, DAMAC Properties Managing Director, says that growth is sustainable in the near future, if you know where to look: "2012 has delivered on our predictions at the start of the year – prices in the Dubai market steadily grew with each quarter outperforming the last. In 2013 buyers will definitely be able to benefit from this capital growth, but will need to be very savvy about where they invest and in which projects in each area."

As the year comes to a close, Al Chaar looks ahead to the New Year with cautious optimism and provides an insight into the places to invest in 2013:

Compliance with the Law:
"Dubai is one of the most regulated real estate markets in the world, offering reassurance and protection for investors. It is a key element which will be the backbone of the steady growth throughout 2013. The more transparent the market becomes as it matures, the more trust clients can have in the system and the large companies which have been operating in Dubai for many years.

Clients looking to come into the Dubai market should, however, always undergo due diligence before stepping into any transaction and there are four documents which they should insist on seeing: the developers trade licence, a contract in place with a master developer, title deeds and details of the escrow account associated to the project you are interested in. Each of these documents is required by law and every reputable developer should be able to supply you these very easily."

Serviced Hotel Apartments:
"There is a reason why DAMAC Properties have announced more than 4,000 luxury serviced hotel apartments in development by the end of 2013. The Dubai market is currently underserved in this area – there are less than 200 serviced apartment projects currently operating in Dubai while there are nearly 600 hotels.

Luxury serviced hotel apartments also provides numerous benefits over a more traditional apartment. Owners can enjoy five-star hotel concierge services while they live in the property, or they can reap attractive rental returns while they are away. Most HNWI's lead a transient lifestyle and maybe only stay in their property in Dubai for three or four months a year.

While they are away, DAMAC Suites & Spa will add the property to a rental pool and manage the whole process of finding a tenant and collecting rents. This flexibility of investment is proving very popular with our clients, and with Dubai's tourism remaining on an upward path, I am confident that this sector will be the biggest driver in growth of the Dubai property market in the medium to long term.

Dubai Statistics Centre is predicting a 10% growth in visitors this year, while a Bank of America/Merrill Lynch report is anticipating 15 million tourists to Dubai by 2020, up from eight million in 2011.

We have been working towards the launch of our serviced apartment offering and we are very excited to complete Burjside Boulevard in the middle of next year, our first Hotel Apartment project. Overlooking some of the most attractive real estate in the world, we hope to provide one of the most luxurious living experiences in the country."

'New' Locations:
"Dubai continues to grow at a phenomenal pace. It is just 41 years old, but residential property development has really only been operating for 10 years or so – it is still an immature market. This means that prices will continue to fluctuate in the short term and buyers should be looking to the medium and long-term when deciding to buy in Dubai.

It also means that locations which just twelve months ago were without any infrastructure and felt distant, will come to the fore and become another component of the 'New' Dubai in a few years. This is a real opportunity for the savvy investor to get into the market while prices remain low and benefit from substantial capital growth in the medium term when infrastructure is complete and the area is thriving.

Areas such as IMPZ, Jumeirah Village and the Emirates/Al Khail Road area will start to grow in valuation across 2013. The Government of the UAE has recently approved an AED 44.6 billion deficit-free federal budget. Within that, 12 percent will be spent on water and electricity services, with a major focus on health and education. This is a clear indication that the required infrastructure to allow these areas to grow will be forthcoming and is committed to."

Quality, location and services will always drive demand. Buying the very best you can within your budget is key to driving sustained capital growth. Look to invest in the most luxurious project in any given area. It is always the 'top' properties which sell first, earn a name and reputation and are the easiest to sell whenever you decide to cash in your investment.

Look closely at the experience and longevity of the developer. Visit their previous projects and talk to owners and tenants in projects they have built. It will provide a great insight into what you can expect as a new owner.

Also, look for the facilities that will be on offer in the project and to what standard they are being built. High quality pools, gardens, tennis courts and gymnasiums drive a much better overall price for the project. People hunt out these luxuries when they are considering buying or renting and it will give you a much better return on your investment overall."

"I believe that there has been no better time to invest in the Dubai property market in the past four years. New regulations, the filtering of the market following the correction and the increases in business and tourism coming to Dubai will it remains one of the most lucrative real estate markets in the world in 2013.

As more established economies struggle to break-free of the global crisis, Dubai is young enough and nimble enough to react quickly, change and come out of the other side in a much stronger position."

DAMAC Properties has completed 37 buildings to date with 7,817 units and spanning 13,945,299.00 sq feet. DAMAC Properties also has a further 65 buildings at various stages of progress across the Middle East, North Africa region. These consist of 11,998 units spanning over 23,000,000.00 sq feet.