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MENA

Dubai Yields closing in on mature markets

According to JLL MENA’s Eighth MENA Real Estate Investor Sentiment Survey 2013.


​​​JLL MENA, the world's leading real estate investment and advisory firm, today published its “2013 Middle East and North Africa (MENA) Real Estate Investor Sentiment Survey.” The survey found that yields for real estate in Dubai have  compressed and investors are now open of acquiring assets at yields closer to emerging Europe and higher than established markets such as Moscow.

The survey indicated  strong demand amongst regional investors for Dubai real estate, leading to the creation of a seller’s market, which is one of the reasons for the yield compression. While some interest for land has returned in this year’s survey, most  investors continue to prefer income producing assets to development.  

Gaurav Shivpuri, Head of MENA Capital Markets at JLL MENA, said: “With the city’s well developed infrastructure, booming tourism industry, buoyant aviation activity and safe haven status, Dubai has emerged has the investment destination of choice amongst its regional peers. We have also witnessed an increase in appetite for larger transactions as compared to last year, which indicates to the return of confidence in the sector and market.
 
Other factors that have resulted in stronger investor interest and tightening yields in Dubai include the better regulated environment, improving economic fundamentals and the availability of more investment grade products. The release of a number of major new projects and speculation around Dubai’s bid for Expo 2020 have also contributed to the prevailing sense of positive sentiment concerning the city’s real estate market. 
 
Outside of Dubai, investors are less optimistic, with yields remaining stable in Abu Dhabi and increasing for some sectors of the market in Saudi Arabia, compared to our 2012 survey.”
Other key findings:
 
  • MENA investors continue to invest at the Global stage having deployed almost USD 4.9 billion across global assets in the first half of 2013. While Central London remains the preferred destination for most Middle Eastern investors, they have shown themselves increasingly willing to look at opportunities in other markets, making major sales in Europe, Australia and Japan over the last 6 months.
  • The residential segment remains investors’ favourite sector, reflecting the predominance of private groups and family investors and lack of institutional players.
  • Investors continue to seek income producing assets, even though development remains an option for many, given the importance of the development arm within many Middle Eastern investors.
  • Dubai, followed by London were the two most preferred markets for regional investors.
  • There has been a  trend towards  larger ticket transactions, a reflection of investors  growing confidence in the market.
  • Location remains the most important factor when considering a real estate investment. Unlike other investments, real estate is very much affected by the conditions of the surrounding areas and other local factors.
  • The growing importance of factors such as exit strategies and transparency show an increasing maturity in the region’s investors.
  • Sustainability is starting to gain more importance amongst the investors’ community, with more investors willing to pay an extra premium to acquire  green buildings.
Craig Plumb, Head of MENA Research for JLL MENA, concluded: “With better economic indicators regionally and globally, the overall outlook for the MENA real estate market looks better than last year. This positive sentiment is boosted by continued infrastructure spending and government backing which is further supported by the stability of high oil prices.  The  region remains primarily a  sellers’ market, with more potential buyers than sellers in most cities. MENA investors remain net buyers of real estate although we  continue to see a large number of investors  seeking to rebalance their portfolios, by disposing of non-core assets and acquiring those more in line with their long term investment strategies.”
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Note to Editors:
About the survey:
This report presents the results of the eighth JLL MENA​ Real Estate Investor Sentiment Survey (REISS). This survey encapsulates the views of leading real estate investors from across the MENA region. Participants are limited to active investors and do not include advisors or analysts. While some high net worth individuals are included in the survey, the emphasis is on more ‘institutional’ investors including Sovereign Wealth Funds, Investment Banks, Private Equity Investors and HNW Family Businesses. A total of more than 300 investors were surveyed for this edition of the REISS. The detailed report of this survey is available on www.jll-mena.com