“A year ago a regional investor would have immediately committed to a residential property yielding around 7% (annualised) because they felt there was an upside for it to go higher,” said Gaurav Shivpuri, Head of Capital Markets — Mena at the consultancy JLL. “Now, the same investors would baulk at a similar exposure because the expected yield growth is just not happening."
“Yield growth (and for high networth investors that is the key takeaway from any asset exposure) on residential in Dubai has been coming down. And as of now, there are very few transactions taking place to give an indication of where yields are headed in the short-term.” (JLL on Tuesday brought out its ‘Mena Real Estate Investor Sentiment Survey’, now in its ninth edition.)
‘There remains appetite for office assets in the UAE, however the lack of available investment-grade product (single-owned ‘Grade A’ office space) has historically resulted in low transaction volumes in the sector’, according to the survey. ‘While some respondents wish to invest in the retail sector in the UAE, the market remains largely dominated by specialised developers leaving little room for investors’.