Institutions deploy Dh100 billion in Dubai real estate market
Banks and private companies are the top institutional purchasers of real estate in Dubai.
Institutional investors made over 15,600 transactions in Dubai in 2017, with a combined value of just over Dh100 billion, according to JLL.
“This sector has consistently grown in value each year since 2013 with transactions by institutional investors totalling around Dh85 billion,” said Thierry Delvaux, CEO of JLL Mena.
Banks and private companies are the top institutional purchasers of real estate in Dubai. Most investments by institutional investors involved some form of debt financing. The vast majority of transactions were for completed properties rather than off-plan. Additionally, unlike other global cities, most purchases were in residential areas rather than commercial ones.
Delvaux said: “Our global research reveals a clear relationship between the openness and transparency of any real estate market and the level of investment attracted. Investors appreciate certainty and are therefore attracted to the most transparent markets, such as the UK, the US and Singapore, where they can more accurately assess the levels of risk and return from any potential investment. Dubai is the most transparent real estate market in the Mena and this helps explain the high level of investment attracted relative to other cities in the region.”
Though Dubai’s market is still dominated by individuals and private companies with less institutional investment than in more mature markets overseas, as more investment-grade real estate becomes available at reasonable price levels, the level of interest from institutional investors in Dubai will increase over the next five years, the JLL executive observed.
He was speaking at the ‘Dubai Real Estate Sector Profile’ forum organised by the Dubai Land Department (DLD). The forum included the launch of the ‘Deraya’ report and the annual performance report of the real estate sector in 2018, and was attended by Sultan Butti bin Mejren, director-general of DLD; Majida Ali Rashid, CEO of the Real Estate Promotion and Investment Management Sector at DLD; Younis Al Nasser, assistant director-general at Dubai Smart Office and CEO of Dubai Data Establishment.
The ‘Deraya’ report was initiated by the department of real estates studies and research of the Real Estate Promotion and Investment Management Sector at DLD, in collaboration with consultancies JLL and Cavendish Maxwell. Through this initiative, the DLD seeks to reduce the manipulation of real estate reports and provide a range of information sources through a unified database.
Bin Mejren said: “These reports provide a key database for investors and international classification agencies to access insights on the performance of Dubai’s real estate market with complete transparency.”
He said the reports are aimed at increasing professionalism across Dubai’s real estate environment, consolidating real estate information sources and elevating DLD to become the leading real estate reference.
Meanwhile, Al Nasser highlighted the importance of data availability to elevate the ranking of Dubai’s real estate sector in global transparency and competitiveness indices.
Jay Grant, founder and chairman, Cavendish Maxwell, said: “A young city competing on a global field for investor recognition, the Dubai real estate market has faced challenges over the years as it developed its level of understanding, initiative and maturity.”
Grant said Deraya is an important initiative as it provides investors with insights based on data not previously in the public domain.
“These initiatives should attract further levels of investment from institutional investors and maintain Dubai’s position as the leading real estate market in the region,” he added.
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