With this year’s Cityscape Dubai property exhibition showcasing more than 500 exhibitors from over 30 countries, aspiring home-owners and property investors are being spoilt for choice with the range of residential property available.
This growth in supply is being outpaced by demand for property, with the rising population keen to find homes across the region. In the UAE alone, according to the 2005 census, more than 60 percent of the population is between 20 and 40 years old, which is the prime demographic for first-time homeowners.
Countries like Bahrain are also seeing strong expansion, experiencing a 27 percent growth in its real estate sector in 2006.
However, while these factors suggest a sustained property boom, the long-term stability of the property market could be compromised without greater awareness of the importance of home insurance, according to experts.
Property booms in other markets have typically also created rises in demand for home owners’ insurance, which covers the cost of the home in the event of incidents like fire and water damage, and home contents insurance, which covers the costs of replacing personal possessions.
However, home insurance penetration rates are less that 5 percent in some GCC countries. This suggests a significant number of under-insured and uninsured properties across the region.
“Given the increasing availability of desirable properties and the number of new home owners within the region, it is essential that there is increased awareness of the importance of home insurance,” said Mahmoud Nodjoumi, owner and CEO of Nexus.
“The home is often a family’s most valuable asset and also a source of stability for the future, so protection for that asset should be a top priority,” he added.
Economists typically position insurance as one of the “four pillars” of a stable economy, along with social security, savings and employment, so the shortfall in insurance investment in the region could pose a long-term problem.
A growing range of home owners and home contents insurance is becoming available within the region, with companies like Nexus actively working with international providers to increase the level of choice.
The company is also engaged in an initiative with the UK’s Chartered Insurance Institute (CII), to help improve the standard of professional certification across the region, so that home buyers can be confident of the quality of advice they are receiving.
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