“High-end real estate developments in Dubai are in high demand after the Arab Spring,” Tariq Ramadan, Chairman, Tharaa Holding, UAE in a paper said.
How has the real estate investment environment changed in the Middle East and Turkey after the Arab Spring?
It shifted interest from certain countries to others. On the long-term, it will create opportunities in largely populated countries, such as Egypt. In the past two years, a lot of money has gone to safe havens including Dubai, Turkey until recently, Europe and the US.
We practice what we preach. We are advising and working on projects in Dubai, which is witnessing double digit growth in the real estate sector. For high-end developments, prices are up 30 per cent from their lowest point a few years ago. There is a lot of demand for high-end apartments at the Dubai Marina, The Palm and downtown in the Burj Khalifa area. Villas are also in demand but supply is limited, so there are good capital appreciation opportunities there. The demand for rental is also pushing rental rates, leading to a high return on investment.
Morocco and Turkey are also relatively safe, as long as their recent political issues clear soon.
These are the destinations we are focusing on at the moment. They offer attractive investment opportunities for GCC investors, while at the same time they are tourist destinations.
“They must be very selective. They need to consider who is developing the project, where it is located, what traffic flow around it, what visibility it has around and what services are available around it. Investors must be picky and make sure there is the potential of capital appreciation and efficient return on their investment,” he explained.
“Historically, many real estate investors have got caught up in speculative investments, resulting in significant losses. They must make sure to research and study their investments, and diversify geographically, within city, the specific country and other countries, to create a balanced portfolio. Of course the portfolio should also be balanced with other financial instruments and vehicles,” talking about how to minimise the risks, he said.
“A lot depends on their risk tolerance, but they should not forget the lessons many of us learnt from the financial crisis and real estate bubble.”
“Investors must be careful of bubbles everywhere. Unfortunately real estate reports do not reflect the status of markets transparently. When they advise clients on certain projects, there can be a conflict of interest in talking about bubbles or risk.”
“Due diligence and research are critical, in order to ensure the risks for each investment are properly managed,” he added.