Infra projects, incentives to make land the top 2020 investment

The chief executive officer of Al Ruwad Real Estate shares insights on emerging real estate trends and the outlook for 2020

Chief executive officer of Al Ruwad Real Estate, Ismail Al Hammadi
Chief executive officer of Al Ruwad Real Estate, Ismail Al Hammadi

The UAE is on the verge of reclaiming its rightful position as the hotbed for real estate investment, judging by the number of multi-billion dollar megaprojects such as the Expo 2020 Dubai, which alongside ongoing capital-intense infrastructure expansion works will continue to attract investors, developers, and homebuyers to the region.

Notable areas in Dubai, including Emaar South, Mohammed Bin Rashid City, Dubai Creek Harbour, Dubai Harbour, Port De La Mer, and Dubai South, indicate that the once sluggish sector is on a path to recovery, witnessing increasing demand for residential units both from owner-occupiers and tenants.

These projects have also benefitted from ongoing government infrastructure development projects, due to their proximity to the Al Maktoum International Airport and the Metro Redline expansion.

In addition to rising demand in residential and commercial property, land acquisition is also on the rise in Dubai. This is driven by the lack of space to develop more commercial and residential units in Dubai’s most popular locations.

Investing in land

Despite its limited availability and constant increase in value, land in Dubai is still a hot commodity. Its lack of depreciation - unlike rent from an apartment block, which registered a 15% decline since Q3 2018 - makes it a worthwhile investment choice.

Land is one of the least risky investments and is generally seen as a safe bet in terms of investment. Any land is a business opportunity. A vacant land is an endless pool of opportunities for both small and big businesses.

Emerging Trends

Signature projects such as the Expo 2020 and the increased economic activities around it notwithstanding, investors are eyeing the Dubai real estate market for other indicators in a bid to ensure a favourable return on their investment (ROI).

Emerging investment trends include new schemes for buyers such as post-handover payment terms, DLD registration fee waivers, free service charge offers, as well as growth in tourist arrivals, and digital technologies such as 3D printing being implemented in real estate.

However, also prices in Dubai will continue to decline albeit briefly with recovery expected from 2021 onwards. The region is expected to continue experiencing a greater increase in international investors, especially from among Chinese nationals who have reportedly invested close to $136m (AED500m).

Mixed-use development projects are also emerging as an investment magnet. Offering an integrated living-working experience, real estate investors and developers are more likely to go for this high-return option in the next couple of years.

Dubai 2020 Outlook

If the current market sentiments are anything to go by, Dubai will be a buyer’s market in 2020. This will come against a backdrop of lower prices and many incentives for buyers.

Investors in Dubai will also benefit from a tax-free property and land, which will, in turn, guarantee a high ROI.

Dubai’s recent ranking as the second safest country in the world in 2019, infrastructure modernisation, and accessible direct flights to most travel destinations have all significantly contributed to the growth of its real estate market.

In addition, the emirate has also been ranked as the Middle East and North Africa’s top residence-by-investment program for the third consecutive year. The ballooning population and a regulated real estate market are other key indicators of why Dubai is a prime investment option.

Other interesting indicators include long-term investors’ visas, 100% business ownership, zero restrictions on repatriation of funds, and the availability of financing of real estate investments with local and international banks.

Dubai’s rising number of economic free zones is also likely boost to land and real estate investment in 2020.

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