Real Estate Investment Boom in UAE

UAE stock markets’ performance over the past week or so has vindicated the boom in real estate investment in the Emirates. On March 18^th alone, Emaar Properties surged by nearly 5.4 percent to finish at Dh9.75. Other real estate stocks like Deyaar Development (4.13 percent), Union Properties (2.99 percent) and Arabtec (2.52 percent) all led the upsurge and real estate became the vanguard of stock market surge during the week. These numbers reflect the rising investment in UAE’s real estate which jumped by a mammoth 30 percent.

Investment Boom

According to a research by Knight Frank, Dubai housing prices showed an annual increase of 28.5 percent at the end of September last year, resoundingly putting an end to a five-year worldwide decline in property prices. This hike means that property prices in Dubai are increasing at the fastest rate in the world, and the reasons behind this are multitudinous.

From the Free Zones and to it being a tax-free city; from easy accessibility through flights to being a popular tourist spot; from the low crime rate to the relatively pleasant climate as compared to the rest of the region, Dubai has become the global hub of real estate investment over the past couple of years. Of course the strengthening economy, manifesting a five percent GDP increase in 2013, and the expected development in the lead up to the 2020 Expo has also contributed to the investment boom in UAE.

Future Trend

According to Jones Lang Lasalle’s (JLL) annual report the real estate market is “smarter and more measured this time around”. And while Real Estate investment in UAE might be escalating at the rate of knots, and the increase is expected to continue as well, there is going to be an element of caution in investment since property development looks like being channelised according to the demand. The demand however, is being driven by a constant increase in demographic numbers, which should continue to rise till 2020 and beyond.

With mega projects on the up, master plan communities like Dubai Waterfront, Dubai Canal and Abu Dhabi’s Zayed City remain lucrative prospects for investment. JLL doesn’t, however, believe that Expo 2020 would have an influence over investment trends in 2014. Its long term influence on real estate investment, nevertheless, is obvious.

Why Invest in the Emirates

The price increase in UAE’s real estate has been steadier in the first three months of 2014, compared to the sudden surge last year. This indicates that the rally is stable and worth looking at in the long run. Furthermore, pivotal drivers of the rally, retail, hospitality and logistics would continue to influence the upsurge in Dubai’s economy and hence real estate would continue to be lucrative for investment. Logistics alone account for 14 percent of the national GDP.

Of course the recent population hike –increase of 200,000 in the past couple of years – would precipitously go up in the future as well. This would have a major impact on housing prices. It also orchestrates investor confidence in the stock market, which boosts the return of confidence, as vindicated by the performance of real estate stocks in the UAE markets.

A lot of the recent positive sentiment also owes itself to Dubai Land Department’s Investor Protection Law and the Code of Corporate Governance for Developers announced a couple of years ago. And with more similar regulations said to be in the pipeline, real estate is clearly worth banking on in the near and long term future.

What the Customers Need

Now with real estate demand skyrocketing, the real estate agent’s job becomes even more crucial than it already is. And hence, it is important for the real estate agents to focus on customer service and make sure they cater to all the queries and concerns of people who might want to invest in real estate at any possible level.

The first step that needs to be taken en route to fulfilling the customer’s demands is by treating the profession as being a means of providing services and not as the business of selling. The real estate agents job, with investment in the sector constantly increasing, is to make sure they find the customer the best match from the expanding gamut of options available to them.

Considering the ‘Digital Spring’ in the UAE, discussed last week, the best possible option for real estate agents and startups is to launch online marketplaces. A two-sided marketplace attracting both the investors and the investment options, is the way to go as far as enhancing customer service in real estate is concerned.