Dubai Real Estate Reform and what this means for investors in Dubai

As we enter Q3 in 2019 news has emerged of several Government initiatives which are aiming to stabilise the Dubai property market through a number of means.

The emirate’s ruler Sheikh Mohammed Bin Rashid Al Maktoum said in a tweet he wanted the committee to ensure that “semi-government real estate companies in Dubai won’t compete with private-sector investors.”

The Dubai Real Estate Regulatory agency has now also confirmed that it will oversee all responsibility of Escrow accounts from developers whilst also accrediting the financial institutions qualified to manage them.

The main issue for the market, investors, observers and everyone in-between is the feeling of an over-supply with the anticipated units that are set to hit the market going to reduce rents that have already seen a decrease in recent years.

The committee though has been set up to regulate this problem though and with details still not fully understood, its main aim is to reduce the problem of over-supply. The committee will have to think long and hard about how to do this but limiting launches and making sure each new project when it is launched adds real value to the market then that would be a fantastic start.

Dubai recorded 109 Billion AED worth of transactions for the first five months of the year, this is an increase of 12% year on year and was released by Dubai Land Department last Tuesday (September 2019) Full Press Release

Investors are entering the market for several reasons, one of the main ones is the amazing terms offered by the leading developers. Post-handover payment terms being the main one, these for the lower end developers are simply just not possible from a cash flow perspective. The larger developers can accommodate them but they are extremely rare in the higher end developments and investors have been seen to take advantage of them.

A prime example is Bluewaters by Meraas, none of the available apartments could be purchased Off-Plan, a purposeful marketing tactic, but now ready the island has also opened up the retail sector as well as the upcoming grand opening of Dubai-Eye (The worlds largest observational wheel). They are offering the chance to move in straight away with a five-year post-handover payment plan as they want to get extremely high residency and make more income from the retail sector on the island itself. There has literally never been a better opportunity to purchase something as grand as a luxury apartment there with better terms and the opportunity to make a profitable investment.

Opportunities are always aplenty in a buyers market and the recent launches from the developers have seen ground-breaking initiatives, such as the holiday home platform from Ease by Emaar. Aligning with the right knowledge partner in a market like this has never been more important.

Markets go up and down and cycles are part of investing. The key to every purchase is the unit itself, is it the best possible unit you could get and if it is, it should depreciate the least in a negative market and rise the most in a growing one.

I personally could not be more excited for Q3/4 2019 and the start fo 2020.

Regards,

Samuel Dawson
(Managing Director)