Predictions for a global meltdown, investor unwillingness and subdued demand were the hallmarks of the real estate sector globally in 2015. The question is whether 2016 will go the same way? Whether you are eyeing the market for investing in land for LLC company setup Dubai, Freezone Business Setup Dubai or to Start Business in UAE, it is important to check out the key trends for the real estate sector in Dubai.
The real estate sector in Dubai looks rock-solid. The basics seem strong and experts predict that the demand will remain strong. Considering that the flow of expats into the city will grow, Dubai will generate more jobs and this will lead to the demand for units to outrun the supply of units. This means that the prices will remain high and builders will be encouraged to finish projects on time.
Rentals will see a short-term price rise due to oversupply so that the next stages of the development and growth in Dubai’s real-estate market will be dictated by the concept of affordable housing. The ever-rising population of Dubai will keep the accommodation demand persistent.
Investors will focus on affordable housing and builders will concentrate on projects that are fully-established and secure. They will offer family-friendly residential communities that offer top-class facilities. The demand for such housing is growing though the supply has yet to catch up. Prices will still be the deciding factor for such projects but do remember that these will be aspirational addresses so the demand will be there. Quite a few developers have already stepped into this kind of affordable housing schemes and projects.
Investment in Dubai realty will give decent returns. With average residential rental returns above 7 percent, which is more than the likes of London and Hong Kong, Dubai is the market to invest in. 2016 will see the initiation of a number of projects on the sidelines of the Expo 2020 and they will help pump in fresh blood into real estate. With the population continuing to grow in numbers, the unit supply could actually fall short of meeting the demand. Thus, investment at the right time will yield high returns.
There will be tighter liquidity. Banks will impose tougher laws and regulations on lending. As such, developers would ‘need’ to look to other avenues for raising money. These could include signing JVs with other firms, building consortiums, refinancing options, and public-private partnership and co-investment partners. Though the market would be lucrative for developers and buyers yet raising funds might be a tad bit tougher.
Adding value to existing projects will be in. There will be reduced capital outflow from the UAE, which in effect means UAE will cut back on investments in real estate in other countries. Combine this with the fund challenge that the developers will face, thanks, to tighter regulations. Thus, instead of more projects and fresh projects, builders and developers might focus on adding value to existing projects. Interesting features, more functional benefits will actually be seen.
All in all, 2016 will be an interesting year for the real estate sector. Declining oil prices and pressures on government budgets will stretch the real estate sector, but considering its resilience in 2015, this sector will only grow despite the challenges.