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Investors in the real estate markets throughout the UAE have good reason to feel optimistic about the year ahead than one year ago.
“Q4, 2020 property monitor data has been encouraging throughout the Emirates and across virtually all real estate sectors, even from the hard-hit office sector, but especially from select residential developments, which have achieved investors' triple goals in respect of rents, capital values and liquidity," Julian Roche, chief economist at Cavendish Maxwell, said in the Q4 2020 UAE Property Market Report.
"There is good reasons from modelling the data to conclude that market trends going forward will be positive," he added.
Video: Why UAE real estate investors have reason to be optimistic in 2021
Economic recovery and rising oil prices this year are expected to support UAE property market recovery.
"Cautious consensus optimism over the oil price is reinforced by the widespread conviction that the global economy will begin to recover, as structural economic adaptations finally start to work," he said.
Both IMF and World Bank predict a subdued recovery with economic growth exceeding 4 percent in 2021.
"Historically, global growth of this magnitude has been associated with very positive real estate market conditions. Regionally, real estate investors may be encouraged into the UAE market in particular, not only because of the political stability that the EIU highlighted, but also by its relatively higher dependence on global economic conditions, mediated through foreign direct investment and trade, by comparison to other regional markets," Roche said.
That real estate comfortably outperformed equities in Dubai last year is another aspect why UAE real estate investors have reason to be optimistic in 2021.
Even the top echelon of UAE stocks returned only 4.2 percent dividends, while average gross yields on Dubai apartments stood at 6.5 percent and 5.2 percent for villas in 2020. "Investors would also no doubt wish to take into consideration the significantly greater volatility in stock markets by comparison to real estate," Roche said.
(Writing by Seban Scaria; editing by Daniel Luiz)
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