A comparison between both London & Dubai in terms of luxury real estate.
Words by Ankita Bhowmick in The Market · Apr. 17th, 2018
With the recent changes and developments in the real estate market, investing in a secure market remains top priority. This is especially after the global crisis of 2007, which was initiated by mortgage defaulters and banking scams that came along. In 2018, 11 years post the global economic recession, Luxhabitat discusses investing in property in two major real estate markets - London & Dubai. Which of these property markets is currently best to invest in 2018?
Brexit, which took place on 24th June 2016 and resulted in the UK removing itself from the European Union has negatively impacted the economy of the country to a great extent, with the pound hitting a 31-year low. The real estate market of the country has been suffering immensely since then as the developers have been finding it very difficult to attract buyers or meet the asking prices.
2017 witnessed more than half of the completed apartments in London remaining unsold due to the oversupply of luxury properties in the region. There are also a large number of properties that are under construction which are most likely to be kept on hold.
The effect of Brexit has since been deepening as over the past year, the UK has witnessed fall in property prices as much as 15%, which were once at the epicenter of the city's property boom. According to Your Move, one of UK's biggest estate agency chains, average prices of homes in Wandsworth, which includes much of Clapham, Balham and Putney, fell by more than £ 100,000 over the last year.
According to Britain's Royal Institution of Chartered Surveyors, demand for properties in London has fallen for the 12th month in a row and prices were flat nationally as new instructions from sellers declined for the seventh consecutive month. They revealed that it is Brexit and Stamp Duty that have killed the fluidity of the London Market.
Therefore, London, currently would not be the best real estate market where investors can expect a good return on their investments.
Dubai's property market was also subject to a decline in prices post-Brexit, but it didn't persist with the market eventually maturing. Though the first quarter of 2018 witnessed flattening in the overall market, the secondary residential market enjoyed stability. Transactions of more than 622 villas and 7,050 apartments took place during this time in both the secondary residential and off-plan market. According to Dubai Land Department, the total real estate transaction that Dubai witnessed during was worth AED 58 billion through 13,759 sales.
Commenting on the current situation of the Dubai real estate market, Sultan Butti bin Mejren, Director-General of DLD, said, "The Dubai real estate market continues to show growth, driven by general optimism and confidence in the real estate sector."
"Achieving almost Dh58 billion in transactions shows strong momentum in the real estate sector for Q1, and we expect this to raise the Q2 transaction index and continue to rally before the end of the year. Analysts and experts predict an upsurge as we enter 2019 with unprecedented strength, as many strategic infrastructure projects are due to be completed in Dubai in preparation for Expo 2020," he added.
It's clear that Dubai is quite favourable in terms of return on investment at this point and would be a good choice for investors when it comes to them investing in the real estate market.