Investors should look deeper into Dubai real estate to exploit chances for medium, long-term gains

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fäm Properties chief says over supplied market offers great opportunities with prices at five-year low

Real estate investors viewing an oversupplied Dubai property market with caution have been told to look again and see that current conditions can yield strong medium to long-term gains.

Firas Al Msaddi, CEO of fäm Properties, one of the UAE’s biggest real estate brokerages, says buyers should be encouraged to enter the market today by price levels at their lowest for the last five years.

Al Msaadi says the key for investors is to look beyond glossy brochures and websites and conduct thorough market research to get a clear picture of where and when to buy.

He said: “On a daily basis clients are asking me, ‘Is the Dubai real estate market oversupplied? The answer is yes, there is weaker demand accompanied by a higher supply, and that’s why the prices are where they are.

“If demand was higher, prices would be double what they currently are, so today’s market offers great opportunities. Investors need to see past the marketing material they’re bombarded with and study the data that’s available in today’s open source market from the Government of Dubai.”

A real estate price index produced by fäm Properties using Dubai Land Department data highlights the rise and fall in villa and apartment prices between 2012 and the end of 2017.

Average villa and apartment prices per ft2 climbed to a peak towards the end of 2014 before falling close to 2012 levels at the end of 2017.

“Investors need to do their homework,” said Al Msaadi. “If they do they’ll see that the most money made from real estate is when prices are low, as they were in 2012. Investors who bought then have done very well because we saw a clear spike in prices up to the end of 2014.

“We’re now back down to 2012 price levels, but they’re not going to stay there. Dubai has a proven track record in overcoming the kind of challenges we’ve been seeing recently. So now is a good time to invest again at the start of another cycle.”

A study by UAE University in August 2017 found that Dubai is one of the fastest growing cities in the world, with a population growth of 1,000% in just 40 years. The research forecasts that the current population of 2.88 million could more than double by 2027 at the same rate.

According to the Dubai Land Department (DLD), 217 nationalities invested a total of AED151 billion in Dubai’s real estate market between January 2016 and June 2017.

Al Msaadi forecasts a surge of activity by early 2018 from sovereign wealth funds, regional asset managers, pension and insurance companies, partly due to the introduction of VAT which will bring added transparency to real estate transactions in Dubai. He says this is a fundamental condition for institutional investors to enter the Dubai market.

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