DAMAC Properties’ report states three fold differnce in value between real estate and cash
Rental returns on premium real estate in the UAE have been valued as three times the value of holding cash in a bank account.
Wooing local investors, DAMAC Properties has collated information from institutions such as HSBC, Cluttons and CB Richard Ellis, that finds the return on a six month fixed term deposit with HSBC stands at 2.1% while the returns on rent in the UAE can fluctuate from 7 to 12%.
“Now that prices have stabilised in premium locations, the high yields make investing in the UAE property market an attractive proposition for any global investor” said Niall Mc Loughlin, senior vice president of DAMAC Properties, who described rental yields as “extraordinarily high”.
The returns are further complemented by the local tax environment and absence of capital gains tax.
“Over the past couple of years the market has been dominated by end users, but we are now seeing a return of the investors. However, unlike the peak of the market in 2008, they are not chasing capital growth; they are focusing on rental yields. It’s a very different market dynamic” Mc Loughlin added.
In times of recession the purchase habits of the super rich follow a similar pattern, with many channelling funds into art, rather than banks. Auctioneers Christie’s announced year end results up 9% with Sootheby’s echoing a healthy 14.5%.
The Qatari Royal family – the highest investors in contemporary art – will sponsor the forthcoming Damian Hirst exhibition at London’s Tate modern; their recent purchases include Hirst’s Lullaby Spring cabinet (US$15m), and pieces by Roy Lichtenstein totalling ($38m) and Clyfford Still at $61.6m.