Buy Dubai property, says US investment bank
A strong growth in population, realistic targets for job creation and excellent existing infrastructure make Dubai real estate a worthwhile investment, according to bullish research from one of America’s biggest investment banks, Bank of America (BofA) Merrill Lynch.
The report, released on Wednesday, cited plans to create 950,000 new jobs in the emirate by 2020 as “ambitious and realistic” and said that it was “feasible that Dubai’s population could more than double over the next ten years”, creating demand for local property.
The research stated that if those jobs were created, and the new population had an average household size of three people, Dubai would see demand for an extra 317,000 units, or 94 percent of current stock.
BofA Merrill Lynch said that the new jobs would be driven by tourism and related sectors, referring to an Oxford Economics report that states that the local aviation sector will support 373,000 jobs by 2020, up 49 percent from the current figure.
“The real estate sector provides a good exposure to growing consumer spending mainly led by tourism and sizeable household consumption,” the report stated, under the headline.
“Dubai should benefit the most, in our view, given a more open and diversified economy, its greater sensitivity to continued population growth and superior past infrastructure investment.”
The bank also predicted that Dubai retail sales growth would rise by 5 percent annually between 2011-20, while retail supply would grow by only 4.4 percent over the same period.
“Dubai hotel guests could reach 6 million by 2020: this suggests a 10-year CAGR of 4.7%,” the research said. “Dubai can attract 1.6 million additional hotel guests by 2020: this suggests a 35 percent increase in Dubai hotels.”