Dubai is the most preferred property investment market in the region, as it includes the greatest number of investment-friendly demand drivers, said a recent report.
Dubai's stable political environment, developed infrastructure and market transparency, makes it competitive in the region, said the 2012 MENA Real Estate Investor Sentiment Survey, published by Jones Lang LaSalle (JLL), a leading real estate investment and advisory firm.
Apart from better economic fundamentals and property prices / rental values, Dubai has the maximum number of investment grade properties in the region, the study said.
With real estate offering more risk/return ratio than alternative investments, several regional investors are disposing their non-core assets and are seeking assets that offer stable long term returns, the report said.
Although real estate is a popular asset class for Middle Eastern investors, they are looking at a strategic approach as they seek to re-balance their investment portfolios.
The survey indicates that investors are ready to pay more for well-located assets with good security of income, in comparison to last year. The real estate market in the MENA region is more dominated by private individuals and families rather than institutional investors, unlike in mature western markets, and this trend will continue over the coming years, the report said.
The residential assets are considered as most attractive, with interest rates going strong in this segment. But, there is uncertainty in the market, and investors are hesitant to invest large amounts of equity in single deals and are wary of incurring excessive debt.
Other risk factors such as security of income, political stability, also remain at the forefront of investment decisions. Investors are willing to pay more for sustainable buildings.
Craig Plumb, Head of MENA research at JLL, said that little money is flowing into real estate from players outside the region and investment market continues to be dominated by local players. Middle Eastern investors continue to remain major players on the global real estate stage, accounting for total of $5.3bn of real estate transactions outside the region during the first nine months of the year.