The mutually supportive relationship between real estate investment and economic growth and development has long been cited as a perfect catalyst that can propel local and national economies towards a resilient and successful future.
In the annals of economic development literature, this is an inter-relationship that has often been explored from several theoretical angles: how can real estate investment shape a nation’s economic development strategies? Why do real estate investments offer more economic benefits than other investments? Does real estate investment spur economic growth or vice versa?
To find an example of how those theories can translate into practice, we need not go far. The practical answer to many of these questions is playing out right before our eyes in Dubai and all across the UAE. Consider the recent data from the Dubai Land Department – which shows that a total of 3,625 real estate transactions worth Dh12.5 billion were conducted during the week ending June 16, 2023. That staggering amount includes the sale of 189 plots for Dh2.28 billion, 2,753 apartments and villas for Dh7.01 billion.
These numbers not only indicate growing global confidence in the city’s booming real estate market but also mirror the rapid and robust growth of Dubai and the UAE’s economy and its global ranking in competitiveness.
That’s because these real estate investments create abundant job opportunities to stimulate economic activity across critical sectors that are at the heart of a nation’s progress, such as construction, retail, hospitality, education, healthcare, logistics and more. As we have seen time and again in Dubai, by catalysing these fundamental industries, real estate investments play a pivotal role in driving economic prosperity and stability.
That role also feeds into the government’s strategic implementation of business-friendly policies, visa and residency reforms, high-end infrastructure and technology landscape, and a world-class lifestyle that have put the UAE, and Dubai in particular, at the centre of global attention for foreign investments and entrepreneurship. Indeed, Dubai has recorded more than Dh263.66 billion worth of FDI inflows since 2015. It retained the top spot globally (in 2022) for the second successive year attracting greenfield FDI projects, according to the latest data from the 2022 Financial Times’ fDi Markets report. With a focus on the digital economy, creative industries, and scientific innovation, the UAE’s non-oil economy has consistently grown faster than the global GDP growth rate in recent years.
What’s more, earlier this year, the government launched the Dubai Economic Agenda ‘D33’, which includes the launch of innovative projects to make Dubai the world’s best city to live and work in. The economic value of the total targets set by the D33 is Dh32 trillion by the year 2033, which also marks 200 years since the foundation of Dubai. The agenda also aims to raise the contribution of FDI to Dubai’s economy to an average of Dh60 billion annually in the next decade to reach a total of Dh650 billion over the next 10 years.
Therefore, with Dubai becoming a global hub for international business and tourism, it is only natural that its real estate sector will also witness heightened demand from local and global investors.
The increased influx of investors has been one of the key drivers of real estate investment, with Dubai recording annual transactions worth a total of Dh528 billion last year. Moreover, during the first quarter of 2023, Dubai’s real estate sector saw transactions worth Dh157 billion in the first quarter of 2023, posting an 80 per cent increase from the same period last year. At Deyaar, we have also seen incredible demand this year after launching several iconic projects across Dubai that redefine luxury real estate and serve the residential and commercial communities of the future.
The significant impact of real estate investment on local economic growth can also be gauged from the fact that the Dubai property market has been at the forefront of leading the emirate’s economic diversification and pivoting to a knowledge economy. This ambitious diversification hinges on the collaborative efforts between the private sector, government, and community stakeholders and goes a long way in enhancing infrastructure and community services. Such public-private partnerships are vital in securing capital and knowledge in the real estate market.
Thanks to such collaborations as well as bullish sentiments driven by strong fundamentals, Dubai is all set to overtake London in real estate investment in 2023, according to Property Realest. An AI-powered study by the agency has forecast that ultra-luxury real estate prices in Dubai would rise by 6.7 per cent to 20.3 per cent by the end of this year, while the main real estate market in London would rise by only 3.5 per cent.
Key contributing factors as Dubai overtakes London are not only the competitive advantages offered by the emirate to real estate owners – such as low taxes and higher returns compared to the British capital – but also a significant jump in real estate prices and occupancy rates. Those factors provide us the reassurance that as Dubai and the UAE embrace an ambitious and exciting future to be among the world’s foremost economies, the real estate sector will certainly play a pivotal role in securing this roadmap for future growth.
Source : KhaleejTimes
