BMI: United Arab Emirates Real Estate Report (Nov-11)
06 Dec 2011 (44 Pages)
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Abstract
BMI is below consensus in our forecast that sees real GDP expanding 3.3% in 2011 and averaging 4.1%
through to 2016. Nevertheless, the UAE’s status as a safe haven amid the regional turmoil of the Arab
spring is actually benefiting the economy: resultant growth and investment in the domestic banking and
tourism sectors as a consequence of Bahraini unrest is of particular note. This is good news for the retail
and tourism sub-sectors of the UAE real estate market.
However, the commercial market remains plagued by huge amounts of unoccupied property and weak
credit conditions. Even with improving economic prospects and expected increased demand, the immense
volume of oversupply will continue to depress rentals. New supply was certainly limited in H111, but
plenty of projects are still under way.
Underlying figures from CPI Financial show that the value of cancelled and delayed construction projects
in the UAE rose 13% month-on-month to US$170bn in August 2011. The country accounted for 56% of
the total cancelled or delayed projects in the Middle East and North Africa during the month. These
concerning figures no doubt contributed to Dubai Land Department’s Q311 launch of its Real Estate
Development Plan, which is to give a rescue package to 100 projects with financial problems.
Includes 3 FREE Quarterly Updates.
BMI is below consensus in our forecast that sees real GDP expanding 3.3% in 2011 and averaging 4.1%
through to 2016. Nevertheless, the UAE’s status as a safe haven amid the regional turmoil of the Arab
spring is actually benefiting the economy: resultant growth and investment in the domestic banking and
tourism sectors as a consequence of Bahraini unrest is of particular note. This is good news for the retail
and tourism sub-sectors of the UAE real estate market.
However, the commercial market remains plagued by huge amounts of unoccupied property and weak
credit conditions. Even with improving economic prospects and expected increased demand, the immense
volume of oversupply will continue to depress rentals. New supply was certainly limited in H111, but
plenty of projects are still under way.
Underlying figures from CPI Financial show that the value of cancelled and delayed construction projects
in the UAE rose 13% month-on-month to US$170bn in August 2011. The country accounted for 56% of
the total cancelled or delayed projects in the Middle East and North Africa during the month. These
concerning figures no doubt contributed to Dubai Land Department’s Q311 launch of its Real Estate
Development Plan, which is to give a rescue package to 100 projects with financial problems.
