Surge in Tourists Stokes Property Sales in Dubai
Record air traffic through the UAE’s airports in 2011 has been identified as one of the key reasons behind a surge in property sales to foreigners, according to luxury developer DAMAC Properties.
Air traffic through UAE airports rose 7.6 per cent last year, according to data released by the Sheikh Zayed Air Navigation Centre. Separately, Dubai airport is now handling almost 4 million passengers a month, making it one of the busiest airports in the world.
“There are two types of tourists to Dubai, those who visit regularly, and those who are perhaps coming to Dubai for the first time. It’s the regular visitors who are buying real estate, because they realise the market currently offers extraordinary value for money” said Niall Mc Loughlin, Senior Vice President of DAMAC Properties.
Many visitors to Dubai come to the Emirate with the intention of spending money. The Dubai Mall was the most visited mall in the world in 2011, with 54 million visitors last year.
“Dubai is the home of luxury goods and with no sales or value added taxes on purchases, it’s a shopping paradise for tourists looking to buy big ticket items such as designer clothing or jewellery. You can apply the same reasoning to explain why these tourists are now buying property” Mc Loughlin commented.
The nationalities of tourists to Dubai are highly correlated with the nationalities of buyers of Dubai real estate. Indian nationals are the second largest group of visitors to Dubai, accounting for about 20 per cent of all air traffic, according to Dubai Airports. It’s therefore not surprising that, according to figures from the Dubai Land Department, Indian nationals are the largest buyers of apartments in Dubai.
“Certainly, buyers from the GCC still account for the largest percentage of land sales, but we are seeing an increasing number of sales to Indian nationals, Russians and Africans” commented Mc Loughlin.
Occupancy rates at Dubai’s hotels remained close to 80 per cent for the last few months of 2011, according to Ernst and Young. While, luxury resort Atlantis on the Palm Jumeirah says its occupancy levels increased by 15 to 20 per cent last year.
“The strength of the hospitality industry is an excellent indicator as to what to expect in the residential property market over the next 12 months. It stands to reason that if hotel occupancy rates are increasing, that will have a spill-over effect into the property sector” said Mc Loughlin.
DAMAC Properties is strategically focused on the serviced apartment development model, with construction continuing at pace at the developer’s ‘Burjside Boulevard’ project in Downtown Dubai, overlooking the Dubai Mall and Burj Khalifa.
“Serviced apartments bridge the divide between luxury five-star hotels and residential properties. We are seeing extremely strong interest in this particular market segment” Mc Loughlin pointed out.
Expanding on its hospitality credentials, DAMAC Properties last year launched its hospitality management offering, ‘DAMAC Suites and Spa,’ which it established initially to oversee the management of ‘Burjside Boulevard.’
“We have recognised that discerning customers are seeking more from their serviced apartment experience. In Dubai it is very common for people to stay for days or weeks at a time, and during that period they don’t want to be cooking or doing laundry. They want the comfort of their own home, with the additional services of a five star hotel” Mc Loughlin added.
Dubai is a vibrant, global business hub with world-class infrastructure; strategic location; established tourist destinations, proven business centres; a highly skilled expat workforce; and most importantly strong and stable government leadership. While these factors contribute to the transient nature of Dubai’s population, the highly mobile workforce has created significant demand for serviced apartments.
The growth in Dubai’s hospitality sector is now attracting foreign investors, who are seeking high yielding property assets.
“We anticipate our Burjside Boulevard serviced apartments will achieve rental yields above 15 per cent. The rental yields alone are attractive for investors, and coupled with the tax-free investment landscape, property in the UAE is an extremely attractive asset class for any investor, anywhere in the world” said Mc Loughlin.
With 36 buildings, including 7374 units completed to date, DAMAC Properties continues to be a major contributor to Dubai’s real estate revival. As it continues to extend its portfolio of luxury products, which offer significant investment opportunities, DAMAC Properties will be an enduring fixture in the Dubai landscape, and Dubai itself will continue to be a major draw for property investors.