Dubai developers are rushing to pick up large-sized plots in the underdeveloped freehold areas in the emirate before land prices start to strengthen once again. Increased activity is especially being seen around Dubai World Central, close to the Expo 2020 venue. Another corridor that is popular with developers is the stretch along Shaikh Mohammad Bin Zayed Road.
It was only in 2012 that developers once again started actively acquiring land after the depressed environment of the downturn of the previous years. With the values of underdeveloped plots remaining relatively stable over the last two quarters, developers are now looking at increasing their land holdings with the idea of either building new projects or retaining it as assets for future transactions.
Land prices have stabilized across most of Dubai’s master-planned communities, and in some cases land parcels in the secondary market have asking prices that are below market levels. Some developers are also disposing their land to use the funds to reduce their debt or relaunch shelved or delayed projects.
However, in some of the more established communities, completion as well as infrastructure development has resulted in increased demand due to which the remaining land parcels carry a premium tag. In Burj Khalifa district, for instance, prime land parcels are available at the higher end of the price spectrum and attract competitive bidding. Land parcels in this area have recorded the strongest price growth.
In the 2014 Global Real Estate Transparency Index released by Jones Lang LaSalle, Dubai was placed 49th with a composite score of 3.11, continuing its run as the most transparent property market in the region for global investors. The score placed Dubai in the category of countries rated as ‘semi-transparent’. Abu Dhabi was also in the same category, ranked 53 with a composite score of 3.20.
The composite score, which is calculated from five sub-indices, including performance measurement, regulatory and legal framework, transaction process, government-listed vehicles and market fundamentals, ranked the UK, US and Australia as the top three countries that were placed in the High Transparency category. In the index, transparency determines the ease with which an investor with large amounts of funds at his disposal can enter and exit a particular market.
Dubai’s sustained efforts since 2008 towards creating a real estate regulatory environment have paid off. The various measures taken by the emirate to facilitate ease and transparency of real estate transactions include improving the status of the Dubai Land Department’s rental dispute redress regime, which protects the interests of both investors and tenants.
With market confidence building up due to the strong fundamentals, investors are moving on from investing in residential and office property and are also looking at making investments in social infrastructure such as schools, hospitals, logistics and retail, which bring stable and rewarding returns in addition to holding prospects for capital value appreciation.