Is the UAE's real estate market set to benefit from the return of Qatari investors?

The United Arab Emirates, Saudi Arabia, Bahrain and Egypt have agreed to fully restore ties with neighbouring Qatar.

On 5 January 2021, the Kingdom of Saudi Arabia, the United Arab Emirates (UAE), Bahrain and the rest of the Gulf Cooperation Council (GCC) member states, along with Egypt, signed the “Al-Ula Declaration” at the 41st GCC Summit held in the city of Al-Ula, paving the way for the re-establishment of political and economic ties with the State of Qatar. This marks the end of a three-year dispute which began on 5 June 2017, and reinforces the commitment of the GCC member states to the political and economic stability of the region.

The breakthrough agreement follows the re-opening of Saudi Arabia’s airspace and land and sea borders with Qatar starting 4 January. We are confirming changes in policy and procedures with the relevant authorities and ministries in the GCC and Egypt in light of these developments.

The real estate sector in the UAE could be one of the major winners from the deal to welcome Qatar back into the GCC family, according to industry experts.

The UAE joined Saudi Arabia, Bahrain and Egypt on Tuesday in signing an accord with Qatar during a summit of Gulf Cooperation Council (GCC) leaders, effectively ending a three-and-a-half-year split between the countries.

Nicholas Maclean, managing director, CBRE, told Arabian Business: “From a real estate perspective Qatar is an important investor internationally including to countries of the GCC and so the removal of any restriction on the free flow of capital would be positive to regional marketplaces.

“Additionally, businesses in the UAE have had a long tradition of operating in Qatar and so a rapprochement should be particularly economically beneficial here.”

According to figures from Dubai Land Department, real estate transactions from 2016 exceeded AED91 billion from 55,928 investors. This included 1,006 investors from Qatar purchasing property in the emirate.

Chris Hobden, head of strategic consultancy, Chestertons MENA, told Arabian Business: “While the immediate impact will depend on how quickly ownership rules are re-instated, the restoration of relations with Qatar, one of the Gulf’s leading outbound real estate investors, is certainly a welcome development.   

“It will likely take time for Qatari investors to gauge UAE market opportunities, and for trust to be re-established, having been given a limited window to divest back in 2017.

“The restoration of relations should also support the recovery of the UAE’s retail and hotel sectors, with high-spending Qatari tourists, previously key consumers of both luxury goods and hospitality services.”

Taimur Khan, head of research at Knight Frank, said: "The restoration of economic and political ties between Qatar and the UAE is likely to have positive implications for the UAE’s real estate sector. Prior to the severing of ties in 2016, Qatari investors were amongst the top 10 most active investors in Dubai’s residential market.

"Whilst we are unlikely to see Qatari investors return to this position immediately, we do expect that investment volumes will gradually increase over the coming year."

Khan added: "In the likes of Dubai, other real estate asset classes such as Dubai’s hospitality sector, are more likely to see an immediate impact as Qatari tourists begin to return to the emirate. Whilst Qatari tourists were not so significant in terms of overall quantum of tourists visiting Dubai, where they accounted for 176,000 out of 14.9 million overnight visitors in 2016, their spending power and affinity towards luxury properties is likely to underpin stronger demand levels in this segment of the market.

"More so, as inbound tourism, both corporate and leisure, increases we will also see the emirate’s retail and F&B sectors also benefit from this trend."