High-rise cluster has seen steady value gains and increasing occupancy levels
By Manoj Nair, Associate Editor
Dubai: While prices in locations such as Burj Khalifa District or Downtown may be at the upper limits of what the market can sustain, Business Bay can still offer scope for investors.
In fact, the Business Bay cluster has been named among the Top 10 global urban hotspots to watch out for, according to Knight Frank, the specialist consultancy. Currently, residential towers within it command between Dh1,500-Dh1,700 a square foot, quite some distance removed from the sub-Dh1,000 the units were going for just 30 months back. “All of the premium addresses such as the Executive Towers, Churchill Towers and Windsor Manor are having peak occupancy levels,” said Niraj Masand, Partner at the property services firm Banke M.E. “There’s a lot of new build happening that could tie in with investor interest.”
Among the other global picks are Williamsburg in New York, Paris’ 16th arrondissement, Cape Town CBD in South Africa and London’s Victoria Park.
“As prices have risen in some target markets, the opportunity for developers to attract buyers to alternative markets within the same cities, or even alternative city markets is a trend we expect to see expand in 2015,” explained Liam Bailey, Knight Frank’s Head of Research.
The consultancy recommends Dubai as offering scope for investors with “moderate price growth”. “By international standards, Dubai’s prime residential property market is relatively inexpensive”, the report states. “This, combined with the fact the UAE economy and employment continues to grow strongly, suggests the prime residential market in the emirate is likely to see ongoing expansion despite new market controls”.
The current upturn in Dubai’s property values was set off by the hot fund flows after the breakout of the Arab Spring in 2011. It continued right though the following year as the wealthy in some of the other affected countries diverted their funds into the city, and they were joined by major commitments from Subcontinental buyers.
Now, more overseas investors could come on board.
“We think 2015 will see a growing appetite for alternative markets and more speculative plays from investors,” said Bailey. “While the removal of stimulus will take away a key support platform from global residential markets, our view is that in most centres the return of sustainable economic growth, especially in Europe, means the outlook for the key world centres for 2015 and beyond remains positive.”