Property remains a very popular Dubai investment option with many investors making substantial profits over the last few years. For those considering investing in property, there are however many different options to consider. Should you invest in residential property or commercial property? Small apartments or luxury villas? What about office or hotel investment?
Dubai property prices have performed outstandingly well in recent years, with huge rises being seen in both the sales and rental real estate sectors. Property consultants Jones Lang LaSalle found that property prices increased by a whopping 56 per cent between mid 2012 and 2014 with rental values also seeing huge gains. The performance of the market in the latter stages of 2014 was more stable, with Dubai prices largely leveling off, however it was agreed by most experts that this is a good thing for long-term market stability.
Considering that Dubai real estate already experienced a speculative bubble in 2008-2009, it was a wise decision to implement deterrent measures aimed at stabilizing the price growth. Since the mid 2014, the market has been seeing price slump, but recently it has given way to a new trend. Slowdown in price decline indicates that the market is entering a recovery period meaning that investing in Dubai property now before the prices start to grow is the best time.
Residential buy-to-let property investments remains extremely popular with property in prime locations generally faring the best within the market. Areas such as Dubai Marina have been particularly popular with both buyers and investors.
The main reason for the high demand in this sector of Dubai property is the city’s population increase – mostly due to massive migrant influx caused by robust business environment and large-scale city development.
Commercial property investment options are aplenty in Dubai, with the retail sector maintaining solid growth in 2016. It is largely caused by strong performance of the emirate’s tourism sector. According to recent data, in 2015 Dubai visitors spent about $4.7 billion on cafés and restaurants and $9.7 billion on shopping.
The office sector has been a mixed bag of late, with only properties located in prime Grade A locations being in high demand. It is worth noting that commercial property occupiers are increasingly concerned with environmental sustainability and easy access, meaning that LEED certified buildings and those with plentiful parking spaces are particularly in demand.
A special mention must go to the hospitality sector with hotels in Dubai performing outstandingly well in recent years thanks to constant year-on-year increases in the numbers of people visiting Dubai. The robust growth in tourist flow has resulted in new hotel projects development thus increasing the total hotel room supply of the city which surpassed the 100,000 mark in August 2016. It is expected to grow further till it reaches 134,000 units in 2018.
Dubai’s government considers tourism sector as one of the most important contributors to the emirate’s post-oil economy and pays great attention to attracting new visitors. According to the government development strategy, the city is seeing new theme parks arising in popular locations as Dubai aims to become the world’s most visited family destination.
This, combined with consistently high occupancy and average per-room rates, means that hotel room investment has risen greatly with those considering Dubai investment options realizing that hotels offer the potential for great returns. The sector is expected to grow further still in the future as the emirate heads towards Expo 2020, an event which is set to draw in millions more people to Dubai.