DUBAI, 27 May 2008 — Dubai has the tower cranes with $100 billion worth of new development projects now in hand. But who is buying all the freehold properties in the Emirates? According to a study, two out of three of all new freehold properties in the emirate are bought by foreign companies or individuals who live outside the country.
MAG Group Property Development, which is looking to grow its portfolio of new property projects to more than 10 billion dirham ($2.1 billion) by 2012, says final home owners currently account for just 30 percent of the market and only 5 percent of them are UAE nationals.
“Reason for this phenomenon is investing in property in the UAE is seen as safe and rewarding and currently better than investing in bonds or stocks,” claims MAG Group CEO Mohammed Nimer.
“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 percent — an unbeatable figure,” he added.
Nimer says foreign investment by both developers and buyers remains vital for the continued growth of the real estate sector. Foreign individuals and companies currently represent between 60-70 percent of buyers of freehold units, he claimed.
The MAG Group currently has five property projects across Dubai worth 3 billion dirhams and is expected to grow its portfolio to 5 billion dirhams over the next two years, Nimer said. A new 800 million dirhams project is shortly to be launched in Dubai’s City of Arabia, for example.
However, more reputed property developers have entered the market. Last week, Dubai witnessed a colorful launch of Property House, a $1 billion real estate and property management company that has already acquired six million square feet land in Dubai and Ajman.
At the launching press conference, held at Burj Al-Arab, Property House CEO Muhammad Nazir, a leading businessman with diverse investment interests in the UAE, Pakistan and Turkey said that investors from Pakistan, India, and China as well as other emerging markets such as South Korea and Brazil are interested in tapping lucrative opportunities in the UAE.
The firm has already made huge investments in the Al-Helio Downtown mini city developments in Ajman that boasts schools, colleges, universities and a full-fledged hospitals.
