British investors are one of the largest group of investors in Dubai’s property markets but the decision by the UK to leave the European Union is unlikely to have much of an impact, according to experts.
As the most open real estate market in the Middle East, Dubai has always found itself more susceptible to external factors. But, despite the interim uncertainty brought about as a result of Brexit the emirate unlikely to feel any long term effects, says a report from international real estate firm JLL.
British citizens are the third largest investors into Dubai’s real estate market, potentially leaving them more susceptible to any negative impacts from Brexit, however, JLL’s Craig Plumb, head of research for The Middle East and North Africa, believes that any negative ramifications will only be temporary.
‘Even though it is too early to predict the long-term implications, overall there is a slight probability of British investors being negatively impacted by the devaluation of the British Pound following Britain’s decision to exit the European Union,’ he said.
‘However, we believe the effect of the decision will only have temporary repercussions as a substantial number of British investors who work and reside in the UAE avoid sourcing their income in sterling,’ he explained.
‘If we dissect the market further, particularly for residential, we notice that expatriates in Dubai are most likely to continue renting their homes instead of switching to ownership, resulting in sales being more negatively affected than the rental sector. If external factors stabilize over the rest of the year, we expect the Dubai residential market to easily recover in early 2017,’ he pointed out.
During the second quarter of the year, office vacancy rates throughout Dubai showed a general downward trend. However, Plumb attributes this to a lack of supply, confirming that Dubai remains the largest and most active office market in MENA with many businesses still preferring to use the Emirate as their regional hub.
Meanwhile, the retail and hotel sectors have fared less well in the immediate aftermath of the decision given the devaluation of the British pound.
‘Dubai and the MENA region as a whole has become an increasingly expensive destination for European visitors,’ Plumb added.
source: Property Wire