Dubai (PTI): The real estate sector in Dubai is being driven largely by foreign investment, with individuals and companies from other countries comprising 60-70 per cent of the buyers of freehold units.

Two out of three of all the new freehold properties in the emirate are bought by foreign companies or individuals who live outside the country, says a study, which also reveals that property developers in Dubai have USD 100 billion worth of new development projects in hand.

MAG Group Property Development, which is looking to grow its portfolio of new property projects to more than Dhs 10 billion (USD 2.72 billion) by 2012, says final home owners currently account for just 30 per cent of the market and only 5 per cent of them are UAE nationals.

"Reason for this phenomenon is investing in property in the UAE is seen as safe and rewarding and currently better than investing in bonds or stocks," said MAG Group CEO Mohammed Nimer.

"In spite of numerous challenges, such as rising costs and shortage of contractors, the real estate sector in the UAE is still one of the most important investment areas in the country. The return on the investment can reach as high as 40 per cent, an unbeatable figure," he added.

Nimer said foreign investment by both developers and buyers, which represents 60-70 per cent of investment in freehold property, remains vital for the continued growth of the real estate sector.

Investors from Pakistan, India and China as well as other emerging markets such as South Korea and Brazil are increasingly showing interest in tapping lucrative opportunities in the UAE.