| Commercial property investment outstrips buy-to-let returns in Dubai |
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Page 1 of 2 The commercial property sector in Dubai is experiencing a similar investment boom seen in the residential market three years ago, says DAMAC Properties, the leading private property developer in the Middle East.In the last twelve months, commercial property in Dubai has seen capital growth of 17 per cent in contrast with 10.2 per cent growth seen in the UK; while annual appreciation over the last two years in Dubai was 23 per cent. This has lead to an increase in the number of small-scale investors and private individuals investing in commercial property to benefit from the favourable rental yields and capital growth. Rental return on a commercial property in Dubai is approximately 20 per cent - 25 per cent where as residential property now typically yields 14 per cent - 16 per cent return. Peter Riddoch, CEO of DAMAC Properties pointed out that now is the ideal time to invest in commercial property in Dubai: “Rather than investing in residential property, more and more private individuals are turning to commercial property to achieve higher returns. A smaller initial outlay is required in Dubai to achieve the same return elsewhere. For example, a commercial investment in Dubai of £180,000 would yield the same return as a comparable property in the UK worth £500,000.” To satisfy this new demand, DAMAC Properties has launched seven commercial projects in Business Bay over the last twelve months with some buildings selling out within a month. The main driving forces behind the trend are Dubai’s 100 per cent freehold ownership laws, numerous emerging industry clusters in tax free zones and the city’s rapidly expanding infrastructure. Peter Riddoch continued: “Interest in commercial property has escalated over the last six to nine months due to limited space to accommodate international companies that are seeking main or regional headquarters in Dubai. The city’s plan for sustained economic growth of 11% per annum for the next ten years is attracting more and more private commercial investors seeking high levels of capital growth and rental returns.” Investment patterns in Dubai’s commercial property sector reveal much local market confidence. Currently 40 per cent of purchasers are local private or corporate investors, 30 per cent are international and a further 30 per cent are from the Gulf Co-operation Council region. Business Bay, labelled as the Manhattan of the Middle East, has established itself as the epicentre of trade and commerce and is now a significant base for the worlds leading corporations. Located adjacent to the Dubai International Finance Centre, the area is set to develop prominence on the world stage as held by New York, London and Hong Kong. Crucially however, Dubai separates itself from this stiff competition by its lucrative commercial property market. Such is DAMAC Properties’ faith in Business Bay that the company plans to open their new global headquarters in the district within the next three years. |
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