Growing foreign interest bodes well for UAE's luxury property

One of the key trends influencing the global prime development market has been the growing dominance of cross-border transactions, with prices of luxury property up by 4.3 per cent in the first three quarters of 2011
By: varun
 
Dec. 14, 2011 - PRLog -- One of the key trends influencing the global prime development market has been the growing dominance of cross-border transactions, with prices of luxury property up by 4.3 per cent in the first three quarters of 2011, according to a new report by global property consultancy Knight Frank.
“Luxury homes in prime global cities will retain their safe haven reputation, but they will attract fewer speculative investors seeking a short-term gain,” Liam Bailey, Knight Frank’s head of residential research, says in the report, which puts the UAE’s Abu Dhabi as the leading location set to see rising demand for new-build property in the future.
Interestingly, the locations tipped for growth in prime market demand continue the trend of the established markets holding out against the key emerging world centres (see table below), the report added.
10 future locations to watch
(Locations set to see rising demand for new-build property)
1.       Abu Dhabi
2.       Japan
3.       Milan
4.       Barcelona
5.       Vienna
6.       Munich
7.      US (Los Angeles and Florida)
8.       Africa (game reserves)
9.       Brazil (Sao Paulo and Rio)
10.   Canada (Montreal and Vancouver)
(Source: Knight Frank Residential Research)
“Prime property in the world’s global cities has been tagged a ‘safe-haven’ investment by savvy-minded investors for the past three years. Against a backdrop of sovereign debt concerns and geo-political uncertainty, wealthy investors have sought the stability of luxury property in key cities,” the report suggests.
This global trend augurs well for luxury properties in Dubai, Abu Dhabi and the rest of the UAE, as savvy investors continue to look for differentiating factors that will result in the property holding its value in the face of glob al uncertainty.
“Despite the current economic gloom, it is important to assess the long-term view and consider the extent to which prime property not only recovered faster from the 2008-09 economic downturn, but recorded some phenomenal price rises in the interim,” the Knight Frank report maintains.
The report goes on to provide examples of cities where prices of luxury property continue to head north. “Prime property prices in London and New York now stand at 37 and 25 per cent, respectively, above their recessional lows. But it is Asia that makes the headlines: luxury homes in Hong Kong are now 72 per cent higher than at their low point in Q4 2008, while Shanghai and Mumbai have seen growth of 115 and 220 per cent, respectively, from their markets’ trough,” it adds.
Evidence also suggests that prime luxury property in the UAE held on to its value much better than other developments during the property crash of 2008-09, and have been the first ones to recover. As the UAE property market begins to stabilise following the global economic crisis, the luxury real estate sector has continued to show strong signs of recovery during the last quarter of 2011, with unique luxury developments such as Al Barari continuing to attract local and international investors alike.
Dubai’s ultra-luxury project Al Barari maintains it restricted speculator interest in their villas, ensuring that contracts could not be flipped.  As a result, prices for the palatial homes have remained relatively close to 2007 levels despite the economic climate and the negative impact on property prices experienced throughout Dubai.
“We have seen a definite increase in the amount of Dh5 million-plus sales this year, especially those in the Dh15m-plus category,” said David  Terry, Luxury Sales Manager at real estate agent Luxhabitat, which has Al Barari as a client.
“This is due in part to the increase in tax for high net worth individuals in their home countries and the current situation in the Middle East meaning that HNWIs are looking for what they perceive as a stable place to live and invest their money,” Terry added.
Al Barari recently announced completion of Phase 1 of its residential development, with 95 per cent of its 189 palatial villas now sold and handed over. “With over 80 per cent of Al Barari devoted to green, open spaces, we have succeeded in creating a unique community that offers a combination of luxury living and sustainability within a unique tranquil setting,” said Mohammed Zaal, CEO of Al Barari.
“This is unlike anything else currently on offer in Dubai and even in the region, which makes our development an extremely attractive investment for high net worth individuals both here in the UAE and abroad,” he added.
Recent international events such as the London Luxury Property Show, aimed exclusively at members of one of Britain’s greatest private members’ clubs, have enabled Al Barari to attract a new type of investor to Dubai, its CEO says.
Today’s eco-conscious investor is looking for a luxury residential property with green credentials and a genuine sense of community which they can call home, and they are willing to pay upwards of Dh20 million for the privilege.
“Al Barari was the only eco-friendly development from the Middle East exhibiting at the Luxury London Property Show, and we are extremely pleased with the overwhelmingly positive response we received from both potential customers and also our peers in the global property industry,” said Zaal.

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Asteco Property Services focuses on providing Property Management, Sales, Leasing, Investment and a host of other services including consultancy and valuation.
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