Investor confidence in the United Arab Emirates, the once-high flying Gulf country that crashed during the debt crisis, is at its highest level in 12 months, analysts say.
The surging investor optimism in the Gulf Region is supported by the positive economic outlook released by the International Monetary Fund, which upgraded its 2011 economic growth forecast for Gulf Cooperation Countries to 7.8 percent.
"Right now, the Gulf region is outperforming most major developed economies around the world. Investors are positive about the future, and that sentiment is resonating in the property market. Real estate is a popular asset class for investors in this region, and a rebound in investor sentiment tends to manifest in the property sector," the senior vice president of Gulf developer DAMAC Properties, Niall McLoughlin, said.
The U.A.E. is best known for its flashy emirate of Dubai, which boasts manmade, palm-shaped islands dotted with luxury hotels and estates. Two years ago, the emirate's ambitious building program came to a halt when its government-run developers had difficulty paying creditors.
But now the region is rebounding while much of the rest of the world remains in the throes of an economic slump. While affordability is likely the most significant factor stimulating demand, the revival of the property market is also being underpinned by a more favorable regulatory environment. The implementation of a raft of new regulations, including Dubai's new Strata Law which favors home owners, has also contributed to renewed buyer confidence in the property sector, analysts say.
"Dubai's real estate market is now more stable and sustainable. Gulf investors are flooding back into Dubai and the broader U.A.E.'s property sectors on signs that the market's bottomed out and is already well advanced with the recovery phase" McLoughlin said.
Investors from Kuwait now account for nearly 60 percent of all properties purchased by GCC nationals in Dubai, according to new figures from the U.A.E. Ministry of Finance. DAMAC Properties confirmed the company has observed an increase in inquiries from Gulf investors, particularly Kuwaiti nationals, over the past six months.
"Dubai is only an hour and a half flight from Kuwait, which makes it an ideal location for a second home, or even a primary home for some Kuwaitis. Dubai has always been popular with Kuwaiti investors, but given the price and the quality of properties now available on the market, Dubai offers phenomenal value for money," McLoughlin said.