Dubai – MENA Herald: UAE buyers are using the strong UAE dirham to snap up international property, particularly in Europe, according to the Dubai office of global property broker, Engel & Völkers. The dirham has experienced strong growth against a broad range of foreign currencies, thanks to its peg to the rising US dollar, effectively lowering home prices in several major cities for UAE buyers.
“Owning property abroad is popular with wealthy UAE residents, either as a part-time residence or as a home for children studying at university,” said Cesar Latrilla, CEO of Engel & Völkers, Dubai. “For this clientele, the fall in the value of foreign currencies compared with the dirham has created an appealing opportunity in several major cities, such as Paris and London.”
Whereas EUR 1.00 bought USD 1.40 in April 2014, by April this year it was buying just over USD 1.10 – a fall of more than 20 percent. The pound sterling fell from almost USD 1.70 to just over USD 1.40 in the same period, or around 15 percent. The strength of the US dollar has had a similar effect across a number of foreign property markets.
Engel & Völkers launched in Dubai during 2015, and while its focus is on local properties, its agents – based in a centralised Metropolitan Market Center near the Palm Jumeirah – can also offer properties from throughout the group’s 36-country network. This includes an extensive network of offices in Europe to include Paris and Rome and another soon to open in London, with a focus on exclusive neighbourhoods, and only for the upper end of the market.
“For our clientele, spending a substantial part of the year abroad is quite widespread, and for those traveling to Europe, the effect of a strong exchange rate on purchases has been noticeable,” said Cesar Latrilla. “It is a small step to consider the same savings could apply to real estate, and that this could be an opportune moment to buy a home in a destination they return to frequently, or that they would like to. Considering the type of property our clients are likely to buy, they can save a considerable sum when they look at the price in dirhams.”
Caution urged for speculative investments
However, although currency values can offer the prospect of a savvy purchase, Cesar Latrilla advises caution to those considering property abroad as an investment. He notes that this can involve two layers of speculation: on the gap between the two currencies narrowing again in the near future, as well as on the nuances of an unfamiliar property market.
For a more secure investment, Engel & Völkers steers buyers towards the Dubai market, where the only change in value will be in the property itself, and where they and their advisors will have a better understanding of market trends.
“Having a luxury second home in a city such as Paris or London, or a countryside retreat abroad, should be a decision of the heart, and considered for the enrichment it brings to your lifestyle,” said Cesar Latrilla. “That is where its true value lies.”