Dubai has quickly grown to become one of the most searched real estate markets in the world thanks to its lavish buildings, infrastructure, and vibrant, global lifestyle. Real estate investment trusts (REITs) are seeing a resurgence in popularity due to the significant increase in real estate prices, which is starting to drive away individual purchasers.
Buying property remains the most straightforward route to gain exposure to the market, but 17 consecutive quarters of price appreciation have put that option out of reach for many. Of the few stocks listed on Dubai’s bourse, Emaar Properties PJSC has surged nearly fivefold from a 2020 low and office landlord Tecom Group has risen about 18% since a 2022 listing.
Traditional Buyers’ Challenges:
As the market heats up, mid-tier residents and investors are starting to worry about affordability. Especially in high-demand locations like Downtown Dubai, Palm Jumeirah, and Dubai Marina, purchasers are being priced out of traditional pathways as top real estate prices rise by more than 50% in 2023.
An Overview of the Real Estate Market in Dubai:
Over the past ten years, Dubai has developed from a small market to a major global real estate goal. Both domestic and foreign buyers have been attracted to the area by its well-known business centre, numerous developments, and investor-friendly legislation. According to reports, real estate sales have smashed previous records, and the cost of homes and flats has increased significantly. Middle-class purchasers now have a harder time owning real estate in Dubai due to this change, which has raised demand for innovative investment possibilities.
What Are REITs?
Through REITs, people can invest in real estate purchases that generate income without buying the property themselves. These funds incorporate the money of several investors to buy, manage, and sell real estate. REITs are a desirable alternative for individuals seeking real-estate exposure with reduced entry barriers because they pay dividends to investors based on the assets’ capital growth or rental income.
REITs offer:
Diversified Investments: A range of property types, including residential, commercial, and hospitality industries.
Liquidity: Since investors can exchange their shares, REITs are more flexible than direct property ownership.
Market Exposure Without Direct Ownership: Investors may access profitable real estate markets, like Dubai’s, without dealing with the hassles and dangers of actual property ownership.
The emergence of several new technology-related businesses in recent years, in addition to REITS, highlights the increased interest in Dubai’s real estate market. A former Goldman Sachs Group Inc. banker launched the online property management platform Keyper, which raised $34 million earlier this year.
According to the Dubai-based company, since its founding in 2021, Stake has raised $27 million and acquired more than 300 properties valued at 540 million dirhams.