The real estate market in the UAE is set to witness an enormous growth rate in the next seven years and will touch an estimated AED230 billion-mark (US63 billion dollar) in value.
This is well above the total value of the real estate market achieved over the last two decades.
"This growth will be made possible on the back of several regional and global factors. The chief among these factors will be the sustained uptrend in current international oil prices which lead to the availability of surplus funds especially with the GCC governments. These funds are mostly invested in government-sponsored development projects including infrastructure. Real estate one of the key areas these funds ultimately are directed at," according to Dr Mohammed Raheef Hakmi, Chairman, Armada Group, leading real estate investors in the UAE.
"Low interest rate on loans, which attracts several small and big time investors, is another reason behind the exploding growth of the recent IPOs both in the UAE and the region. These funds are borrowed with an eye on the higher returns, either from the booming regional stock markets or from real estate," Dr Hakmi said.
"While banks offer much smaller returns on deposits at present, investors in real estate have reaped far higher benefits, making use of an opportunity to park their funds in this lucrative sector. This is because investors have realized that real estate offers a safe return and sustained appreciation in market value in a place like Dubai and the UAE." Dr Hakmi added.
Probably, the single most important factor that triggered this growth is the flexibility in local and regional property laws and regulations that have allowed foreigners and GCC nationals to own real estate. Recent announcements regarding property laws vis--vis foreign nationals by other GCC states have only helped this trend to consolidate.
Helped by this trend is the move by multinational corporations and major financial institutions who prefer to come and set up shop in Dubai, taking advantage of the atmosphere here which is conducive to business. A well-developed infrastructure is another factor that facilitates the business environment in Dubai and the UAE and is an added attractive feature to these multinationals. Recent announcements by the Dubai government on the Business Bay, the Dubai Biotech City (DuBiotech) etc encourage more companies to move to Dubai and play a key role in the growth of real estate, Dr Hakmi added.
However, diversion of funds from the western capital markets to the emerging economies, especially those maturing markets in the GCC for a higher and safe return have also boosted the sentiment in the local and regional real estate sector. This trend will see the real estate market grow by leaps and bounds in the years to come," Dr Hakmi said.
Domestically, huge growth in population estimated to increase to 2.1 million by the year 2010 and the rising number of tourists visiting the UAE will trigger demand in both residential and hospitality sectors. Recent reports indicate as many as 45 new 5- and 4-star hotels are coming up across the Arabian Gulf region in the next three years.
"Thus the overall scenario for the real estate sector in the coming years seems to promising to investors and homeowners alike," Dr Hakmi pointed out.
-Ends-
© Press Release 2005
