Positive appeal for property investment in Dubai

UK remains a firm favourite for almost 60% of investors from the GCC region

Prime property yields in 2015 for Dubai
Prime property yields in 2015 for Dubai

Demand for institutional quality assets across Dubai and other key GCC centres has been rising, according to a study, 2015 Dubai Real Estate Investment Report, prepared and released by global property consultancy Knight Frank.

The growth is assisted by numerous factors, including the fact that yields remain relatively high in context of other global cities. Against a backdrop of low interest rates globally and relatively volatile financial markets regionally, the flow of capital into real estate has continued.

Over the past 18 months, the spread between all-property yields and the Dubai government bond has widened beyond its long-run average – almost entirely due to the receding “risk-free” rate.

“While the Federal Reserve has indicated that it is likely to push up interest rates – which in turn should help to close the gap – our suspicion is that prime all-property yields will also edge down,” said the report.

It added: “This is predicated on the fact that historically there has been a reasonable correlation between changes in prime all-property yields and GDP growth in Dubai – which forecasters have projected, will accelerate in 2015. In other words, faster economic growth should lead to further hardening of yields in the near-term.”

Developed property markets such as those of the UK and Europe should continue to see strong levels of demand from GCC investors. 

Knight Frank’s Middle East Capital Tracker – which monitors professional real estate investors’ favoured global destinations – shows that the UK remains a firm favourite for almost 60% of investors from this region. The GCC itself, as well as Continental Europe, also rank high.

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