In two years Expo 2020 Dubai will both amaze the world and leave an enduring impression for generations to come. Recent government initiatives, such as new visa rules, business incentives and other economy-boosting measures are likely to influence Dubai’s property market. Property Weekly asks top executives in the real estate market about their thoughts on 2020 and beyond.
Simon Townsend, senior director and head of strategic advisory and consulting of CBRE
Long-term residency visas should impact the residential market in the UAE positively, giving expats more security over their rights to remain in the country, which in turn could see increased sales volumes as confidence is restored. Additionally, the decision to grant expatriate retirees visas, which are valid for five years and are subject to extendibility, could further open the market to secondary and senior housing, ultimately increasing the demand for residential units.
The pipeline for the residential market remains strong with more than 100,000 new units currently under construction and due for completion between now and 2020. Select projects such as Nshama’s in Dubailand are marketed as affordable, while the majority of the upcoming supply remain weighted towards the mid to high-end category.
While this could suggest that an affordable gap persists, a number of incentives are being offered to potential buyers. These include guaranteed periods of rental income as well as lower service charges. In terms of key geographical spread, Dubailand, Mohammad Bin Rashid City and Dubai Creek Harbour are absorbing the majority of upcoming stock.
Generally, rental rates are seen as the barometer for actual residential demand. Although it is difficult to predict when this downturn cycle will pick up, it is fair to assume that as the gap between supply and demand narrows, rental prices will start registering growth. For that to occur, the government should continue to look at ways to stimulate the economy in order to create additional jobs, attracting more human capital, which in turn will increase the demand for residential space.
Fred Durie, CEO of Nshama
Thinking long term
The issuance of long-term visas will definitely have a positive impact on the real estate market, as it enables residents to plan ahead and make viable investments that add to their quality of life. Investing in own homes is one of the priorities for residents, given the significant savings they can make by shifting away from a rental model.
Demand for affordable and value housing will continue to spike in the coming years, especially with more middle-income professionals aspiring to move from a rental model to owning homes. With more young people joining the workforce, there will be greater demand for homes that can be effectively met through master-planned neighbourhoods such as Town Square Dubai that are not only affordable but also assure a high quality of life in a trendy community.
Rental value reflects market demand — and with the economy gaining traction, led by drivers such as the preparations for Expo 2020 Dubai, rentals will continue to be robust in sought-after neighbourhoods. Demand for property is linked no doubt to many factors, including the job market and the all-round performance of the economy. Today, with Dubai underlining its position as a global hub for tourism and leisure, the prospects for the property sector look robust.
Abdulla Bin Sulayem, CEO of Seven Tides International
In the real estate market, there remains plenty to be optimistic about. Dubai is expecting more than 25 million visitors by 2020, so it will be a busy two years, especially with the development of the Expo site, Dubai World Central and the Dubai South area, where innovative value-based market propositions will be key, such as guaranteed returns on developments aimed at investors and attractive payment plans, directed more towards end users.
Recent economic and legislative reforms implemented by the government are also expected to attract more foreign investment, reduce the cost of doing business and stimulate economic growth.
Moreover, flexible payment plans will continue to open the off-plan market, making this a popular proposition among investors and more attractive for many people when compared to more expensive, ready-to-move-in properties with less favourable payment plans. Even with the challenges of declines in rents and, of course, property prices over the last year, the market has matured and for this reason I am very optimistic that rental prices in Dubai will start to increase again looking towards 2020 and beyond.
Job creation and security
With the opening ceremony of the Expo 2020 now just over two years away, Dubai needs to focus on delivering more affordable housing in preparation for the influx of new residents, who will be arriving to take up jobs related to the exposition. Of the jobs created, a large number will be low to middle-income households, so we need to create more affordable housing to keep the workforce living in Dubai, rather than those residents looking to live in the surrounding emirates.
Job security will always be essential to individuals who decide to reside in Dubai, and this definitely has an impact on the demand for property. If individuals are secure and happy in their jobs they are much more likely to stay for longer with their families.
Robert Booth, managing director of Ellington
Long-term residency has a positive effect on the market, as it tends to result in more stability and predictability. The UAE government is committed to stimulating the local economy and has been introducing measures, including the proposed long-term visas, with a view to encourage long-term investment in the region. Another recent example is the announcement to grant five-year residence visas for expats. Initiatives such as this catalyse the economy and housing market and will no doubt benefit property prices in the long run.
Job security, among other factors such as the growth of the economy and the performance of core economic sectors such as trade, retail, hospitality and tourism, among others, is a key driver of demand. Secure jobs enable customers to make long-term investments, especially in property.
Affordable homes are needed to meet the growing demand from mid-income professionals and the youth entering the workforce. Typically, the property sector has focused on developing high-end and premium communities — a trend that is now changing with more affordable homes in the market.
Rents are based on demand and supply, and with the economy gaining more traction, especially with the preparations for Expo 2020 Dubai, there will be an impact on rents. With more professionals taking residency, demand for homes will increase, especially in sought-after neighbourhoods.
Dubai will soon welcome the world for Expo 2020, where people will be able to see what a beautiful place Dubai is to live and to work in. My hometown, Vancouver, had its Expo in 1986, and the benefits were seen for the next 20 years. Expo 2020 will put the city on a world stage, and the market will benefit from this activation for a considerable period of time with more than 25 million international visitors expected during the six-month period.
Dubai’s property market is made up of a diverse investor base — Ellington alone has seen more than 80 nationalities invest in its properties. Our Belgravia I is home to over 40 different nationalities making the community one of the most diverse in Jumeirah Village Circle. We’ve also seen a significant rise in Chinese investors for our premium residences; they now form our top five customers by nationality.
Source: Gulf News