UAE. Dubai has long been associated with luxury developments and extravagant architecture, but the emirate's property market continues to grow and mature - and it's a change that is welcomed by developer Nakheel.
The company behind the iconic Palm Jumeirah was in London at The Dubai Property Show. In an exclusive interview with TheMoveChannel.com, Chief Commercial Officer Aqil Kazim discussed the changing face of the Dubai real estate.
Here are seven insights from inside Dubai's property market:
1. Speculators are being replaced by end users
"We're seeing a shift from speculator market to a more end user market, which is what Dubai was looking to do anyway. It's very healthy. Today, we sell to end users more than speculators and this is what we're all about. Reasons to invest are perhaps rental yield, perhaps the lifestyle of Dubai, perhaps you have family and friends there, perhaps you want a second home."
"The situation in Dubai was... the speed at which capital appreciation was happening was just too fast and a lot of people wanted to jump on that opportunity, which is not wrong, but it's not something that we encourage. We would like some speculation, but not the entire thing based on speculation."
2. Cooling prices are not a concern
Dubai's prices cooled last year, but the mood is positive in the real estate industry.
"I call that a correction more than anything else. There are a few factors causing that - overall, there's a global effect. Interestingly, rentals haven't dropped as fast as prices have dropped, so the yields are actually increasing - again, it's becoming more and more attractive for people who are looking into buying and investing and leasing or even choosing it as a home because they're getting better prices. As far as Nakheel is concerned, we have projects in both high end categories as well as investment categories, so we have a variety of options."
3. Brits: Nakheel's third largest group of investors outside the Middle East
British investment in Dubai has been there for many years, says Kazim.
"The relationship between the two cities of London and Dubai has been a close relationship. There are a lot of similarities. Both are central hubs for trade, finance. The reasons to select Dubai are the sunshine throughout the year, the cultural scene is very compatible for what British investors look for - we have more than 170 nationalities in Dubai. A simple example I keep giving is the education sector: we have a lot of boutique syllabuses. If I were from Japan and I wanted my son to go to a Japanese school, that option is available. Korean schools. The number of British curriculum A Levels, GCSEs, all of them are available."
4. The Expo 2020 boost is starting now
Dubai is hosting the World Expo in 2020, something that is widely expected to give a boost to Dubai's property market.
"I think now's the time for it to start," comments Kazim. "We're in 2016, the event's in 2020, and it's a large scale project. We sell plots of land to third party developers. Those developers who bought land from us in the past have started to construct projects, purely because they've seen demand rising out of projects like Expo."
5. Tourism: There's a clear demand for 3-star hotels
Dubai is associated with high-end homes and luxury hotels, but there is growing demand for 3-star hotels in the emirate.
"As far as hospitality is concerned, there's a clear demand for 3-star hotels. Not to say that 5-star is not in demand, but Dubai's target is to achieve 20 million annual visitors and tourists by the year 2020. We're still quite far off - we're at 14.5 million right now - so the number of rooms has got to increase."
6. Oversupply is not an issue
Despite some media reports, Nakheel is not concerned about the possibility of oversupply in the market.
"We deliver projects on a feasibility basis and it has got to be able to fulfil some kind of demand for us to launch it. There are reports out there talking about oversupply. I don't know, I'm probably an optimist, but you're looking at a city that has ambitious growth plans in term of resident population. Even if that growth was half achieved, we would be in short supply, not oversupply. We wouldn't be building projects if it wouldn't be fulfilling a certain demand."
7. On the growing number of tall buildings around the world...
"Competition is always good! Dubai is not a very old city - it's been around for 50 years or so," he adds. "We want to be competitive. And a lot of these [landmarks] are value propositions - having the tallest tower attracts tourists, having the biggest mall attracts a certain type of clientele. You will notice that the architecture of Dubai focuses a little bit on the vanity side, you're quite right. It's important to attract tourists on a repetitive basis - as a tourist, I want to be able to see something new every year."
Read the full interview at TheMoveChannel.com.
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