Details

Including UAE, Turkey:

Vibrant property markets maintain competitiveness, driven by Britain

-Property transactions in Dubai exceed AED125 billion in H1

-London house prices projected to grow 3.7 per cent by the end of 2017

Investors’ loyalty towards certain markets has become the determining factor in selecting an investment destination rather than the availability of potential business opportunities.

Al Mazaya Holding in its weekly real estate report, attributed this to the maturity, clarity and legislative readiness enjoyed by many real estate markets across the globe, noting that availability of sufficient financing, credit facilities and cash inflows that match real estate developments are the major determinants of investment spending. The report added that investment opportunities in the real estate sector are available in distinct categories, spaces, rates and locations, only waiting for investors to strike their deals at the right time.

The report mentioned that the Brexit has neither resulted in tapping new property markets nor did it trigger an exodus of real estate investments from the Britain’s real estate market as it has already secured the confidence of investors from different parts of the world, maintaining its competitiveness overseas, particularly in the UAE.

The report added that property markets all over the world have come under different financial, economic and political pressures over the past period as a result of the economic instability suffered by oil-exporting countries, not to mention the state of political volatility that has had its own bearing on the overall scene.

Price corrections recorded in some property markets have helped create new investments, which capitalised on attractively low property rates, said the report. The Britain’s property market has maintained its price stability as a result of demand remaining at a level that has kept prices unchanged as yet, it added.

The report singled out the markets of Dubai, Turkey and Britain as among the most stable markets that enjoy high demand levels from individuals and institutions alike, with an increasing number of new real estate projects having been recorded over the past period at these markets that meet the needs of different categories of investors and potential buyers.

The real challenge faced by the British economy in general and its property market, in particular, lies in the sharp devaluation of the Pound which has had its own new impact on the living standards as well as on commodity and services prices, while property maintained price stability, with no rate hikes having been observed as yet.

The report added that London property market has not shown any sign of price retreat as was expected, given that house prices in Britain, however, have doubled as much as they were during the 2009 global financial crisis, with property rates spiralling from around 280,000 pounds to 470,000 pounds in 2016.

According to available data, house prices in London will grow 3.7 per cent by the end of the current year against 4.4 per cent last year, said the report. It added that the Britain’s real estate market enjoys incentives and stability levels never found in many property markets around the world, including 99-year freehold, with property owners having the power to dispose of their land at their discretion, including all buildings. Property investments in London depend as well on growth rates rather than income levels, not to mention the availability of robust legislation ensures the protection of local and foreign investors’ rights.

The report maintained that diversity of investment opportunities in more than one market won’t have a negative impact on Gulf investors wishing to have a foothold in foreign markets, adding that devaluation of Pound against US dollar is likely to attract UAE, Qatari, Saudi and Kuwaiti investors to Britain’s property market as it will trigger a fall in house prices and help draw more real estate investments.

The report expects Gulf investments in Britain to undertake a radical shift, as Gulf investors have become more interested in the hospitality sector than in purchasing houses for personal use with a view to benefiting from the high returns generated by the tourism sector all year round. Statistics show that around 2.7 billion pounds of Gulf investments have been funneled into the hotel sector in the UK last year, with 4 per cent of Britons expecting a hike in property prices following the Brexit, which shows that the decision to withdraw from the European Union will reflect positively on the real estate market, including houses and offices.

In the meantime, neither political instability nor currency devaluation has obstructed foreign direct investment (FDI) inflows into the Turkish economy during the current year, with available data pointing to a noticeable increase in Turkish investments overseas, which reflects the Turkish economy’s ability to generate cash inflows through internal and external investments.

Data released by Turkey’s Central Bank revealed a 65 per cent increase in FDI during H1 of 2017 to $3.6 billion, with Turkish investments overseas up 9 per cent to $2.4 billion. The country managed to draw $3.6 billion in foreign investments until April 2017, a growth of 2 per cent over the last year, most of which are centred in areas of retail trade, property and construction. Residential rates posted record highs over the past five years, with an annual average rise of 90 per cent. Istanbul got the lion’s share of foreigners’ property purchases and the total number of real estate units sold during the first three months of the year hit 4,270.

In Dubai, the uptrend continues, with research data showing an increasing demand for land sales and mortgages, exceeding AED125 billion in value over the H1 as a direct result of the current active movement that culminated in pumping $40 million of real estate projects, which reflects the current and future potential of local and foreign demand for the emirate’s property.

The Dubai real estate market is capable of meeting investors’ needs, said the report, noting that the demand is focused on the hospitality, retail trade, and leisure sectors along with luxury apartments. Dubai, the report emphasised, is now in a position to benefit from all the developments witnessed in regional and global property markets thanks to its highly competitive edge in terms of attracting investors and tourists from different parts of the world.