The decline in house prices and growth in demand for rents combined with a high investment yields make Dubai the most popular "safe haven" for investments, the latest report by Knight Frank UK consultancy said.
Dubai and London have always been mutually popular among European and Middle Eastern investors. During the year the volume of the Middle Eastern investments in super-premium London properties increased from 11 to 16%. However, in recent years, the reverse process is gaining momentum too.
After the Dubai housing prices have declined by 12.2% pa, according to the Knight Frank Global House Index, more and more foreign investors began to pay attention to the local real estate market. And it’s quite understandable, for the increase in demand for rents together with the fall in sale prices have jointly pumped up the average yield returns in Dubai by 9.9% to 7.42 per cents.
Meanwhile, mainstream residential prices in London increased around 71 per cent, making it not really affordable for buy-to-let investors, while Dubai abounds this kind of real estate offers now and will have even more affordable options after 20,000 new units come to the market.
The rising attractiveness of the residential rental segment in Dubai is creating opportunities for real estate investors, especially where properties are reasonably priced, the report said. For example, Dubai Marina apartments are still a much sought-after asset. If yields continue to rise in Dubai, Knight Frank experts predict, a further buying activity is anticipated from buy-to-let and buy-to-live investors.
“Furthermore, an increasingly important institutional investment segment is yet to mature gradually. This is in return will eventually help residential prices gather momentum in the near future,” the report said.