Introduction
Over the last 20 years, the UAE has been home to one of the world’s fastest growing property markets. A constant flow of tourists and holidaymakers is maintained thanks to year round sun and luxurious hotels, expats have flocked to the UAE thanks to favourable tax laws and investment in the nation has seen constant increases as a result. The question now is, can this momentum continue or has the UAE real estate market had its day?
Drivers Of Demand
International investors and high-net-worth buyers
The UAE has become synonymous with high net worth individuals. In particular, areas like Dubai and Abu Dhabi are home to some of the world’s wealthiest CEOs and sports stars. The abundance of designer stores and expensive cars demonstrate the vast wealth that exists in this part of the world, and wealth is good for real estate.
Global hub
The UAE has become a global hub for sport, lifestyle and business. And as a result, more people find themselves in the country for both work and leisure purposes. Many of the world’s leading brands have bases in the UAE, including the likes of Google, Microsoft and Visa.
Growth in population
The reasons mentioned above mean it’s becoming increasingly popular for people of all walks of life to call the UAE home. From individuals relocating for better opportunities in the corporate world to professional athletes taking advantage of more lucrative opportunities, the country continues to see growth in terms of population.
The Sustainability Test
If the UAE is to continue to see growth in the real estate world, there are a few challenges that the nation will need to overcome. The biggest challenge arguably lies in whether supply can keep up with demand.
Dubai in particular is home to many new residential developments, but some would argue real estate in the city is about to reach a point where there is a surplus of property. Coupled with rising prices, investors may prefer to look at markets that can provide stable, consistent income.
Overall, this doesn’t necessarily signify a decline in UAE real estate. It may just be that the market has matured and that investors must be savvier when choosing where and how they invest in the UAE real estate market.
Competition
To determine whether or not the UAE will continue to be a powerhouse in terms of real estate, it’s important to consider alternatives and competitors which are a threat to its crown.
Algarve
In terms of the European property market, Portugal is undergoing somewhat of a boom. The nation has developed a reputation of being a hotspot for digital nomads, with favourable immigration laws for individuals who want to use Portugal as a base while working remotely. Add this to an attractive climate, relaxed lifestyle and strong transport links to other European cities, it’s easy to see why investors are turning to the Algarve. Areas such as the Algarve are particularly popular with investors due to the high number of tourists, golfers and retired expats, making Algarve villas and vacation homes extremely attractive investment opportunities.
Saudi Arabia
One country that has fast become a regional competitor to the UAE is Saudi Arabia. In recent years, Saudi Arabia has become an important nation in the worlds of sport and entertainment. Riyadh in particular is undergoing somewhat of a real estate boom, particularly in terms of commercial property with more businesses viewing Saudi as a profitable market.
Miami
Many parts of the US are seeing an increase in the performance of ultra luxury property. Miami in particular is proving to attract wealthy buyers from overseas, especially those who can afford to invest in the upper end of the market.
Final Thoughts
It’s important to remember that the UAE doesn’t have to keep delivering exceptional increases for it to be considered a strong real estate market. In fact, the next phase probably won’t be about steep increases but more about supporting demand and population growth. However, it’s also worth keeping an eye on developments in Saudi Arabia, which is emerging as regional competitor to the UAE.
