In the UK, Strutt & Parker faces a much tougher market this year. Commercial property transactions have slumped by as much as three-quarters in the first three months of 2008, with the global financial crisis impacting on activity.
But this international property consultant has been planning to open in Dubai for sometime and is now doing so in association with local investment bank Jaspar Capital, hoping to capitalize on a big increase in interest from its major institutional clients in Middle Eastern real estate.
'We are already working on a number of transactions in Dubai,' head of commercial division Andy Martin told AME Info. 'Commercial property is a very long term business and our institutional clients have watched the evolution of the Dubai vision and now want to participate.'
From the perspective of a local property commentator there are two ways of looking at the arrival of Strutt & Parker and its global clients. First, you could argue that it is the last, late arrivals in a boom that has been going on now for six years, although less for commercial property.
Or secondly, you could suggest that this marks a new stage in the evolution of the Dubai property market, with the bigger, long-term players in the global market looking to participate in a market that presently offers high yields.
The truth might lie somewhere between the two views, and there is a third possibility. The global property investment institutions could be dipping their toes in the water, so that they have experience and knowledge to participate in any future correction due to oversupply.
Certainly these institutions should be able to roll-over any short-term ups and downs in the marketplace. On the other hand, if the commercial property boom continues in Dubai then they can at least participate from this stage, and ratchet up their presence.
To some extent there is also a point that if a large commercial property market exists anywhere in the world, then these players will want to be a part of it. They pretty much have to take part if the economic conditions are right and ownership is legally secure, so they are just following the market.
However, that large global institutions are thinking in this fashion is surely another mark of progress for Dubai property: for it is the presence of these players that will ultimately drive rental yields down to global levels, and capital values upwards.
As with residential property, the current rental yields available on office space in Dubai are an anomaly in the global marketplace, and it may be that this is the first correction that occurs in Dubai commercial property and not a price correction due to oversupply as many analysts think.
Given the low interest rates available to institutional borrowers, chasing high yields in Dubai also makes good sense, and if the supply of property is delayed then there is time for yields to come down and prices to go up. See also:Watch: Emirates launches Shariah property fundOmniyat Investment Management to be real estate focused