UAE leads GCC in Foreign Real Estate Investments

The UAE leads the Gulf region in terms of investments in the real estate abroad, said Richard Divall, head of cross-border capital markets at Colliers International EMEA.

In total, the Gulf investors invested more than ?3.9 billion (Dh15.74 billion) in different real estate sectors across Europe, the US and Asia last year with UAE investing ?2.2 billion (Dh8.8 billion) followed by Kuwaiti (?1.1 billion) and Saudi Arabia (?600 million).

Most of the Middle East investments by the regional investors were made in retail, hospitality and housing sectors, Divall said while giving a presentation at the Cityscape Conference on Tuesday.

The UAE’s investment’s top destination was the US market with at ?970 million followed by ?592 million in the UK, ?133 million in India, ?131 million in Germany and ?63 million in Italy.

While Kuwaiti investors’ main target markets were the US (?768 million), UK (?250 million), Canada (?41 million), Netherlands (?40 million) and Singapore (?8 million).

“The UAE is US and UK focused market; and now India is also getting attraction from institutional investors from this region. For Saudis, UK is more favourite as it is more attractive,” he said.

“We are seeing more and money wanting to go into real estate in different regions. Asia-Pacific had a huge boost in the last couple of years as all markets are benefiting in Asia Pacific from foreign investment. There is a bit upturn in America and bit downturn in EMEA because the UK is well down on investment volumes,” he said.

Higher returns
Real estate in the UAE is not only affordable now but the rental returns are also double of what is offered by the Far Asian markets, industry executives said.

“Generally, the rate of return in Thailand, Malaysia and other neighbouring markets is around two to three per cent. If we get 4 per cent return, that is a jackpot. But here in Dubai, the returns are up to 7 per cent, which is amazing,” said Kashif Ansari, CEO of IQI, a global real estate, investment and advisory firm headquartered in Malaysia.

Bilal Moti, managing partner of Windmills Valuation Services, stressed that where in the world investors can have up to 7.5 per cent net rental income through a passive investment and which developed city in the world offers an average price of $225 per square foot.

“The Expo 2020, low interest regime, sufficient liquidity with banks, and the increasingly relaxed immigration regulations are strong positive indicators and conducive to reinstate the real estate market of Dubai to its resilient conditions in the near future,” he said.

IQI and Windmills Group, a property valuation and brokerage company, have signed a Memorandum of Business Association. The strategic alliance will give Windmills access to IQI’s resources around the world including its clients, projects and platform and allow the two firms to collaborate in all business areas.

“We are optimistic of pursuing our strategic expansion across Mena regions. With the upcoming Expo 2020, we believe that the UAE will continue to serve as our regional real estate business hub due to its strategic location, international accessibility, and robust legal system,” said Ansari.

Shan Saeed, chief economist at IQI, said the real estate market may be attracting relatively limited investor’s attention today compared to 2002-2008 and 2012-2013 periods due to the time mismatch between supply now and the expected growth in demand in the near future.

“Few regional political challenges also remain a question in investors mind. I believe that both subjects are contingent and short term in nature. Over the medium to long term, investment in UAE real estate is likely to be a huge earning opportunity, in view of relatively strong US dollar and positive outlook of oil price,” he added.

Benazir Moti, managing director of Windmills International Real Estate Services, said the prime objective of the association with IQI is to promote the lucrative UAE property market across Asia, Australia and Canada through IQI’s extensive network of offices in those regions. – waheedabbas@khaleejtimes.com