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August 3, 2016

As the most open real estate market in the Middle East, investment opportunities in Dubai has always found itself more susceptible to external factors. But, despite the interim uncertainty brought about as a result of the UK’s decision to leave the European Union, the market is unlikely to feel any long-term effects.

With its highly diverse population, data from the Dubai Land Department suggests that British Nationals are the third largest investors into the Emirate’s real estate market, potentially leaving them more susceptible to any negative impacts from the ‘Brexit’ decision.

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 says

“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.”

“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.”

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 real estate 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,” concludes Plumb.

Click here for more JLL analysis on Brexit

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Craig Plumb

Head of Research, JLL MENA

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