UAE: Foreign buyers dominate freehold market
Two out of three of all new freehold properties in the United Arab Emirates are bought by foreign corporates or individuals who live outside the country, according to one of Dubai's leading property developers.
MAG Group Property Development, which is looking to grow its portfolio of new property projects to more than AED10 billion ($2.1 billion) by 2012, says final home owners currently account for just 30% of the market and only 5% of them are UAE nationals.
"It is not difficult to understand why," says MAG Group CEO Mohammed Nimer. "Investing in property in the UAE is seen as safe and rewarding and currently better than investing in bonds or stocks.
"In spite of numerous challenges, such as rising costs and shortage of contractors, the real estate sector in the UAE is still one of the most important investment areas in the country. The return on the investment can reach as high as 40% - an unbeatable figure."
Nimer says foreign investment by both developers and buyers remains vital for the continued growth of the real estate sector. Foreign individuals and corporates currently represent between 60-70 per cent of buyers of freehold units, he claimed.
Nimer also revealed that some developers are now re-purchasing properties they have developed from current owners to re-invest them in the market with returns ranging between 20-30%. Around 2-5% of developed properties are re-purchased by developers, he claimed.
The MAG Group currently has five property projects across Dubai worth AED3 billion and is expected to grow its portfolio to AED5 billion over the next two years, Nimer said. A new AED800 million project is shortly to be launched in Dubai's City of Arabia, for example.
The MAG Group is also preparing to enter the booming Abu Dhabi market and is looking at development proposals in the Northern Emirates, details of which will be given in due course.
“We are not the kind of company that makes outlandish claims, like the highest, the biggest or the most expensive," Nimer said. "In fact, in the residential sector we emphasis on competitively priced buildings appealing to the mid-range market. We also focus on delivering our promises.”
© 2008 Al Bawaba (www.albawaba.com)