A new Nation in Town

The largest developer in Dubai, Emaar, made a major headline by announcing that it is going to temporarily halt new projects due to the massive property glut. It is widely known that excessive supply in the region has adversely influenced property prices, and in some prime areas, property prices have lost more than 40 percent of their value. Most of the supply glut took place without having the actual supply and demand in check, and the Dubai Expo 2021 made the region over-enthusiastic.

Generally speaking, Dubai's real estate market has been in a downtrend for several years, and the coronavirus crisis has made matters worse. This has also influenced the rental yield. House prices in Dubai are down over 40% from their peak, and this means a massive opportunity for savvy investors. Family offices and institutional investors are still not convinced that this is the time to buy, but they are indeed very interested.

Sir Anthony Ritossa from Ritossa Family Office said, "What I have noticed during our last two conferences in Dubai since October, is a surge of international companies mainly from the US, Canada, France, Switzerland and the UK moving their company headquarters partially or wholly to the UAE as well as moving their families too. The UAE is affirming itself as the epicentre of business development, especially in the fields of AI, Tech, Blockchain, Agriculture, Healthcare, Education and Diamonds. Moving your business to a dynamic hub whose vision is to be self-sustainable and a leader in knowledge-based industries by 2030 is making sense to many ex-pats, including myself who moved permanently to Dubai nearly two years ago. My family love it here. The most significant selling factor is safety and security, something that we feel we do not get anywhere else, in tandem with outstanding education, leisure outlets, dynamic business flow and proximity to one-third of the world.”

Ritossa added, “We welcomed last week a record number of Private Offices of Ruling Families, Family Offices and Investment Holding Companies from the UAE who predominantly invest in real estate, both regionally and internationally, principally Europe and the U.S. We noticed a keen appetite in distressed hospitality entities from 3 to 5 stars and high-end luxury residential purchases."

A New Nation In Town 

There is a new nation in town for the first time, and they are eager to bag some bargains. Until recently, Israelis couldn't enter the UAE due to the conflict over Palestinian land. The Middle East peace agreement orchestrated by the Trump Administration has put the relationship between the UAE and Israel on the normalization path. Now, in Dubai, there is a flood of new tourists from Israel, and many of them are actively looking for the right business opportunities, especially in the real estate sector.

The Israeli government and the United Arab Emirates (UAE) are hopeful that the new peace agreement will help both regions, and it will enhance their trade. Both countries have established themselves as a pioneer in their area of expertise—Israel as a tech hub, and the UAE as the best infrastructure developer and owner of the tallest building in the world.

Shira Greenberg, Israel’s Chief Economist in the Ministry of Finance, told me at the 13th Sir Anthony Ritossa Global Family Office Investment Summit under the High Patronage of H.H. Sheikh Saqer Bin Mohammed Al Qasimi,

"Trade potential is estimated to reach billions of dollars and is expected to grow significantly in the near future. The normalization agreement will bring prosperity to the region and will ensure a brighter future. Due to the geography of the countries, the agreement will connect east and west. The governments are aimed at creating a beneficial infrastructure for investment and trade and have signed a bilateral investment treaty that would provide certainty and predictability for investors of both countries."

She added, "in our vision, there is much potential in regional infrastructure projects, and one of the most strategic infrastructure projects is Tracks for Regional Peace, connecting by rails the east and the west through the ports of Israel and the Gulf area. This project will have a significant impact creating a safer and more efficient way of transport reducing time and costs of shipping goods between the west and the east." However, the details are thin in relation to who is going to invest in the infrastructure.

The most important aspect is that joint ventures have the most value if there is R&D cooperation. Greenberg mentioned that "we are creating new collaboration bridges between the UAE Ministry of Finance and the Israeli Ministry of Finance. There is much potential for R&D cooperation between Israel and the UAE."

It is imperative to keep in mind that this is only the beginning of new relations, and governments are trying to develop a new relationship that isn't going to be a walk in a park. The real estate market has taken a nosedive, and new buyers from Israel may be able to find bargains.