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"In the midst of chaos, there is also opportunity."
Words by Jason Hayes in The Market · Jan 5th, 2017
As 2016 fades out, I cannot help but think the world is a somewhat more insane place than it was in January 2016, but as Sun-Tzu so eloquently said, “In the midst of chaos, there is also opportunity."
In order to understand the Dubai property market, one must have a global perspective. Dubai is recognised as a true international hub with investors from the four corners of the globe. According to data from the Dubai Land Department, international buyers accounted for 75% of luxury real estate investment in the first two quarters of 2016. In light of this, the microcosm that is the Dubai luxury property market is shaped by worldwide geopolitical events. Brexit, President-elect Trump, and low oil prices have all affected the luxury market here, but not as negatively as one might first imagine.
Dubai in 2017 will, I believe, benefit from the political uncertainty in the West. The election of Mr. Trump and his anti-Islamic sentiment have already shown signs of dissuading Middle Eastern investors from buying properties in places like New York, Miami and Los Angeles. Middle East-based investors will, I predict, look to invest in their own region.
In light of this, we hope to see an upturn in transactional activity for buyers with US dollars to spend. As many Middle East currencies are pegged to the dollar, I believe we will see Middle East-based UHNW individuals with US dollar income streams or assets in US dollars looking to invest in the Dubai luxury property market.
2017 will see Dubai continue to position itself as a true safe haven for UHNW individuals. An increase in government and banking regulations serves to confirm the city’s intention of good governance and proper regulation. This, aligned with a favourable tax regime, coupled with residency rights and a sense of safety and security, means Dubai in 2017 will continue to be an aspirational location for UHNW individuals looking for luxury properties.
At this time of year, I am fondly reminded of the immortal words of the English poet Tennyson, “Hope smiles from the threshold of the year to come, whispering, ‘It will be happier.’” I am quite optimistic that these wise words can be applied to the Dubai luxury property market in 2017.
This article was originally published in Thomson Reuters Zawya