DUBAI: Iranians are likely to become major buyers of property in Dubai once again if sanctions against the Islamic Republic are lifted owing to a historic nuclear deal reached between the Islamic Republic of Iran and a group of world powers in July.
The Iranian entry into the market can provide a much-needed fillip to the emirate’s real estate sector, property consultants Cluttons said.
Dubai property prices have fallen slightly this year, ending a sustained rebound from 2008-9 crash after tougher regulations to deter speculators, a slump in oil prices and weakening confidence in the global economy dampened sentiment.
Cluttons estimates residential prices, including both houses and apartments, are 3.1 per-cent lower than this time last year, according to its report on Dubai published on Tuesday.
“It is our view that Iranian nationals will seize the opportunity to make significant real estate investments in Dubai,” Cluttons wrote.
“This is expected to be amongst the first lead indicators of the benefits to the UAE from the lifting of Iranian trade sanctions.”
In 2010, Iranians were the fourth largest foreign buyers of Dubai property, behind India, Britain and Pakistan, and accounted for 12 per cent of real estate transactions, Cluttons said, citing Dubai government data.
This had slumped to 3 per cent as of the first quarter of 2015.
Yet Iran was the United Arab Emirates’ fourth largest trade partner in 2014, despite the sanctions, with the two countries conducting an estimated 62.4 billion Dirhams ($16.99 billion) in cross-border trade, up 8.3 per cent year-on-year, Cluttons wrote, attributing the figures to Tehran.
Dubai house prices fell 5.1 per cent and apartment prices 0.6 per cent in first half of 2015.
“Any weakening in regional demand for Dubai residential assets as a result of continuing oil price declines is expected to be countered to an extent by Iranian funds,” Cluttons said.
Iran and six major powers have reached a historic nuclear deal on July 14, which was aimed at grant Tehran sanctions relief in exchange for curbs on its nuclear programme.
Sealed in Vienna after a 13 year stand-off, the deal was reached between Tehran and the United States, Russia, China, Britain, France and Germany.
Analysts say that the economic gains for Iran will include: access to Iran’s frozen foreign assets; participation in the international banking and trade system; larger oil and gas exports; and substantial financial and technical investment.