Dubai’s Property Market Staging Dramatic Comeback

With improving economic conditions in the Gulf, Dubai’s property market is staging a dramatic comeback. Laura Henderson reports

Drive down Sheikh Zayed Road, the futuristic 12-lane express highway that slices through the heart of Dubai and the drill and hum of construction work is hard to ignore. It’s a scene repeated across most of the Emirate’s Downtown district at present with tower cranes cranking up activity once again – many in the footprints of mothballed development projects that have lain abandoned since the 2008 crash. “The global spotlight is on Dubai again,” says property analyst and consultant Mario Volpi. It’s hard to take in given the battering it took during the crisis, but seeing is believing.”

Much has been made of late of improving economic conditions across the Gulf, and in Dubai’s reawakening in particular, with the latest forecast from global information company IHS Global Insight indicating that the State is on track to realise a 4.1% GDP growth by the end of the second quarter of 2014.

“Dubai’s diversified economy (manufacturing, tourism, finance) has proven more resilient than the wider global economy had anticipated,” explains Volpi. “Residential rents are up 17%, hotel occupancy is booming and the Dubai stock index is up 20% on the year. But real estate activity is pepping up proceedings too – with more than 23,000 permits for new constructions issued in the emirate since January – among themMohammed Bin Rashid City, the brand new district named after Dubai’s ruler which will feature the world’s largest shopping mall and gardens bigger than London’s Hyde Park. High profile residential projects, among them, Trump International Golf Resort, are also breaking ground on the back of rising house values with the average price of mid-range villas soaring 47% in the year to May. The return to form is largely being driven by demand from North African, Asian and Middle Eastern investors many of whom are cash buyers, but UK and Western European purchasers are back in increasing numbers, trading up while there’s still a window for negotiation.”

Build-up, suggests Jonathan Fothergill at agents Cluttons is nevertheless expected to be slower for buyers seeking finance to fund their property purchases. “Lending is available but banks are not hugely active in financing off-plan investments for obvious reasons, with stringent conditions set to remain to avoid the market overheating.”

Eleven years have passed since legislation was passed allowing foreigners to purchase property on a freehold basis. Ownership still remains restricted to designated zones, principally prime real estate locations centred around Sheikh Zayed Road and covering about 30% of Dubai’s total property stock. The emerging freehold developments out of town however, look set to dilute investors’ dominant interest in both Downtown and the high-rise clusters on the stretch leading up to Jebel Ali Free Zone, suggests Craig Mitchinson of international property consultants Mirage, although buyers should “proceed with caution”.

“Buying in a new neighbourhood has its price attractions but established developments are arguably the better option long-term, not least because this tranche of real estate is likely to hold its value given the dual demand from both domestic and expat markets.”

Adds Will McKintosh of Jones Lang La Salle: “Savvy buyers have all to play for. New laws pending set to further regulate the market include the percentage of completion of a development project before homes can be sold. It’s what’s needed to make the emirate a mature investment prospect. Learning from experience has its upsides.”

Where to Invest

Emirates Hills

Often referred to as the “Beverly Hills of Dubai” Emirates Hills, in its inception, master developer Emaar Properties, pioneered the idea of freehold property in Dubai, with this landmark project the only one offering owners the opportunity to build their dream bespoke villa from scratch with plot sizes big enough for multiple glamorous homes let alone one.

This prestigious gated community comprises 600 villas and boasts 2 golf clubs - the world-class 18-hole Montgomerie and the elegantly manicured Emirates Golf Club, The Golf Club House and Spa offering a relaxing atmosphere for non-golfers and golfers who are done playing for the day. Each of the individual neighbourhoods also has a residents’ recreation area with infinity edge swimming pool and requisite five-star leisure facilities. The resort is close to Dubai Marina and just 30 minutes’ drive from the airport. Prices start from £4.2m. www.emirateshills.com

Al Barari

Just a short drive from Downtown Dubai, 80% of “desert oasis” Al Barari’s 14.2 million square feet is made up of green, lush space. 34 themed gardens and over 16 kilometres of naturally landscaped lakes, freshwater streams, cascades and waterways envelop this 189 luxury-villa development, making it one of the lowest density urban communities in the United Arab Emirates (UAE).

The Reserve at Al Barari comprises just 28 villas, 14 ready to handover as shell and core, with a further 14 in development. Plot sizes range from 21,000 square feet to 75,000 square feet, each property having a minimum floor area for six spacious bedrooms, together with formal and informal family living areas. Residents can take their pick from an extensive selection of on-site amenities, including a fully equipped gym and fitness centre with sauna and steam room, communal pool and two tennis courts. A signature spa and health club are scheduled to open in the spring.Prices start from £2.5m. www.thereserve.ae

Palazzo Versace

Occupying a prime waterfront location on Dubai Creek – when built out, Palazzo Versace Dubai Resort will sport a glamorous 217 suite hotel, together with two exclusive residential wings Ala Destra and Ala Sinistra comprising 169 luxury residences with access to the hotel’s full complement of services and amenities including fine-dining restaurants, cocktail bars, a Versace boutique, spa and gymnasium.

Homes range from one to six bedrooms and include single-storey, split-level and spacious penthouse units, offering stunning waterfront views, with wraparound balconies and terraces. Ground floor duplex and upper level units come with private pools. Prices start from £1.1m for a one-bedroom apartment. www.palazzoversace.ae