Dubai Real Estate Becomes A Safe Haven For Asian InvestorsFriday, August 10, 2012
According to news, the safe heaven status of Dubai real estate market is aiding recovery of the sector. For that, take the example of the tallest skyscraper in the World, Burj Khalifa, in which Indian citizens remained the largest buyers of commercial space and luxury apartments during the first six months of 2012. Indians spent US$222 m while Iranians remained the second largest buyers of Burj Khalifa property in H1 by investing US$128 m in Burj Khalifa.
International sanctions have been imposed against Iran over of its disputed nuclear programme because of which Dubai is one of the very few safe havens for Iranians to invest money. On the other hand, Indian rupee depreciated by 20% against the US dollar since the Q3 2011 and investing in Dubai property is a refuge from Indians against currency depreciation. Finally home prices, after falling by more than 60% in Dubai, are recovering in some areas. The major reason behind it is that Dubai is experiencing an increase in influx of foreign investment.
According to the Middle East economist at Citigroup in Dubai, Farouk Soussa says, many people in Russia, Pakistan, the Middle East and the Asian subcontinent are looking for a save haven and Dubai market is ideal in this regard. He believes market has bottomed out and that the market is reasonable for long term investment.
For a healthy property market, it is necessary that it reduces the pressure of indebted companies restructuring their loans, shows positive effects and contributes to the GDP of the country. Dubai property market contributed 13% to the GDP last year. Moreover, positive signs have been reported in the first half of the year but recovery is not uniform in the market. Some areas, especially districts in northern Dubai, are still facing price declines.
A report by CBRE reveals that average rent of the apartments increased by 2% in the first six months of the year. Well located communities, like Downtown Dubai and Emirates Living, experienced rises of 5-8 percent quarter on quarter basis. Stock Strategies in London, Graham, said that Dubai resembles London in a way that its safe haven status is luring foreign investors and aiding its property prices.