The real-estate sectors of India and China continue to grow at a blistering pace and the ongoing economic prosperity has naturally had a knock-on effect on these countries real-estate markets. However, they are yet to challenge rival market known collectively as the Gulf Cooperation Council (GCC); the Persian Gulf region and in particular Dubai has been the real power house so far in terms of economic development growth.
Real estate developer Sama Dubai, a subsidiary of Dubai Holdings, recently conducted a straw poll
at September’s recent prestigious MIPIM Asia 2006
property expo in Hong Kong. Surveying 100 key real estate decision makers, when balancing risk against returns, 58% opted for the GCC, in particular Dubai, over China and India.
The rise of foreign direct investment, prosperity of the middle class and other contributory factors has meant the real-estate industries of India and China are set to become a lucrative proposition. Many new office buildings, apartment buildings, shopping centres, and hotels are currently under construction in this region and whilst confident about Dubai’s future, Sama Dubai acknowledges the opportunities both these nations present:India’s real estate market is very lucrative with a strong economy, growing demand and a housing shortage of 60 million residential units alone. Shopping centres and multiplexes covering over 4.3 million square metres are due to be built in the next 24 months.
With a forecasted economic growth of 9.9%, according to the World Bank, China too has a very attractive real estate market with demand continuing to rise. The building market has reached new heights with some US$200 billion entering this sector in 2005 and 1.4 billion square metres currently under construction. Challenges such as language and an over heating economy concerned investors despite the current is belief that China is attracting the most investment (35%) followed by India (33%), Japan and the GCC tied (both at 12%), Australia (6%) and Korea (2%).
Investors saw India as having the greatest growth potential (38%) with the GCC coming a close second (34%) and China coming in third (28%). Respondents felt that whilst returns from India are slightly higher, when compared to Dubai, these accrue over longer periods of investment.
Dubai’s active wooing of overseas investors through a continual roll out of new policies to encourage investment, improve their business environment, reduce tax burdens and increase labour law flexibility coupled with greater cooperation with other governments especially in Asia is reaping greater investment from both East and West. India and China may have booming economies and growth orientated real estate markets but Sama Dubai’s CEO Farhan Faraidooni pointed out that Dubai has excellent logistics and infrastructure, a major factor for business investors when deciding on location. He highlighted that respondents noted seven key factors, based on which they make decisions. The highest ranking conditions were:
- market conditions
- micro and macro economic factors
- rental prospects
Dubai aims to outperform its opponents by offering better policies in all of these areas in addition to 11.6% of it's GDP equating to US$41-54 billion of investment into tourism,
including hotels and off plan holiday homes. The result of these investments has translated to a significant climb in the price of Dubai property, in particular commercial real estate, over the last two years. Every respondent agreed that the appeal of the GCC to future overseas investors will continue to rise, however greater awareness of the real estate investment opportunities available throughout the GCC is needed as 60% stated they were unfamiliar with the prospects on offer and 92% wished to know more about potential options. This poll suggests the Sheiks ambition to transform Dubai into the most important, richest city in Asia is most certainly on the right track.
Sama Dubai are sharing Dubai's evolutionary real estate achievements with the world
having exhibited successfully at MIPIM Asia 2006 and this week at Expo Real 2006, Munich they showcased their diverse portfolio of luxurious resorts and stunning corporate towers stretching from GCC locations such as the 2nd phase of 70 million sq ft waterfront project - 'The Lagoons' in Dubai Creek aimed at middle income investors has just sold out, to the North African US$2 Billion 'Amwaj' project part of a larger development plan launched by HM King Mohammed VI last year in the historic Bouregreg area of Rabat, Morocco's capital and will make the Bouregreg an attractive tourist destination.