Statements and questions we hear daily:
Who will live in all the buildings being built.
What will happen to the sale and lease values when all those
properties get delivered.
Should I buy an apartment today or wait for a few years
maybe I can get a better price while more is built.
To answer the above statements we would need to look at few
fundamentals.
Dubai has done great in the past few years, growing through
a vision that has never failed to amaze, while many challenges were evident
which is normal; the market lived through a financial crisis and is going
through another cycle as we speak. However let’s look beyond the real estate
market in Dubai; Let’s look at all other parts of the economy with a 20
year of the city’s history to consider:
20 years ago the city was all about some trade, too much of
sun and beaches.
Few years later, Dubai developed to become a city suitable
for luxury vacations, known for great events, mice, shopping, logistics and
became a regional hub.
Yet was Dubai affordable for the back packer or the low
budget tourist: No
Was Dubai competitive for industries to grow: No
How many entertainment attractions did Dubai have: Very few
Let’s look at what’s happening in Dubai today.
I will start with the obvious EXPO2020. And I am
starting with the Expo not because of the significance of the Expo itself and
all the hype and the great opportunities around it. I am starting with the Expo
because of the significance of the vision that targeted winning the bid to host
the Expo and is currently building much of what will make the city sustainable
and competitive to thrive beyond the Expo.
Let’s look at Dubai today and what have been put together in
preparation for the future:
Dubai today has so many entertainment attractions ready and
coming up to be added to what Dubai always had. Such hubs grow Dubai’s
position on bucket lists as well as improve Dubai’s ability to attract repeat and chain tourism.
While creating the platform to allow more affordable stays
with the introduction of laws and platforms for short term lets and several
other initiatives to help attract the low budget tourist. This move alongside
the growth of Dubai’s budget carrier and public transport will allow Dubai to have
a share of a new market of tourists and business travelers who couldn’t afford
Dubai previously.
Introduction of several laws to increase the availability of
affordable housing which would help in reducing one of the biggest costs for
any individual thus company set up in Dubai. This move will allow industries to
become more competitive as well as help improving Dubai’s positioning
as a regional hub and the competitive center for regional head offices for multinational giants.
Taking the above into consideration let’s answer the
questions posed in the beginning of our article.
Who will live in all the buildings being built: the growth of
industries will drive the needed occupancy rate higher. It is a gradual move to
a sustainable housing market which will take few years to establish and will
last for generations to follow.
What will happen to the sale and lease values when all those
properties get delivered: values will move with the market, we will move to a
market were prices are scaled from the low end property to the high end luxury destinations.
Supported by the growth expected while taking into consideration that the whole
market dynamics will change prices will become more sustainable and resilient.
Should I buy an apartment today or wait for a few years
maybe I can get a better price while more is built. The best time to purchase a
property was yesterday. Let’s remember property is a hedge against inflation
which at the same time holds intrinsic value. Property as an asset class pays
you an annual dividend and by nature holds the sum of what commodities hold as
a price change mechanism as well as land. Both elements which scarcity affects
positively. Last but not least the purchasing a property through a mortgage
will allow you to purchase an asset which is by nature appreciating in value
while paying for it in the future at it’s price today.
A city with sustainable fundamentally, vibrant economy,
mature with a GDP multiples of what it is today. Welcome to Dubai the city of
the future.
