Updated: February 21, 2015 5:01:04 am
Rising US dollar combined with worldclass infrastructure and high quality of life are strengthening real estate market in Dubai which is competing with other global cities such as Paris and London, according to a report.
Real estate consultancy Knight Frank in the report said that $1 million could buy 146 sq m of prime property in Dubai, whereas the same area would cost $3.5 million in Paris and $5.8 million in London.
Hafeez Abdullah, Chairman of the H Holding Enterprise, which controls diversified investments in the region including real estate, quoted these figures while referring to how strong US dollar, vis-à-vis other currencies, was having a positive impact on Dubai realty market in the long run.
“The strong dollar is impacting the volumes of real estate transactions from countries with sinking currencies against the USD which demonstrates the global attraction to the Emirate’s property sector, especially from European, American, Russian and Asian investors,” Abdullah said.
He said that the rising US dollar will filter out speculators as the market becomes more end-user driven, than speculative investor driven. Commenting on the effect of rising USD value against other currencies, Abdullah said: “The plummeting international currencies against US dollar means less speculative investors from the countries with falling currencies, such as Europe, Russia and China. This factor is further aided by Dubai’s more mature regulatory measures, such as the ones introduced by the Dubai Land Department (DLD).”
“Speculative investors are going out the door now and buyers with long-term plans are entering the realty market of Dubai. The currency factor makes the Dubai property market more international in nature,” he said. International investors whose currencies are sliding are waiting until their currency gain momentum against the USD, before purchasing residential units as the strong USD makes Dubai prices look steep.
Many studies of Dubai realty market have underlined the importance of taking speculative investors out of the market for a healthier and sound property market.
The report says that the new development would lead to a market driven less by liquidity and more by supply and demand fundamentals.
Regional and international investors are the key drivers of the UAE real estate industry, aided by the maturityof the market, and all this will contribute to further growth of the sector. The strong dollar is cooling the market and weeding out short-term investors. Rental yields in Dubai are still one of the most lucrative worldwide as well as ROI on buying, which means that the realty market is very robust and on the way to becoming end user driven, Abdullah said.
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