Aug 16 2012
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UAE property market begins slow recovery
Thursday, Aug 16, 2012
Dubai: The UAE’s real estate market is showing signs of recovery - nearly four years after the sector faced the fallout of the worst economic crisis in September 2008 that nearly halted most of the development activities.
Backed by a structured cash injection, careful re-engineering of major development companies and rescheduling of projects and debts, the sector is expected to rebound - although slowly, according to market experts.
“The overall residential market is seeing a positive trend with the villa market continuing to outperform the apartment sector in the second quarter of 2012,” real estate consultant, Jones Lang LaSalle (JLL), said in a recent report.
“Prime residential buildings in well established locations continue to see improved performance, but secondary locations are still suffering from rental and pricing declines,” the report stated.
Sorouh Real Estate, meanwhile, recorded Dh259 million profit - a 29 per cent increase over the same period a year earlier, while its revenue jumped 247 per cent to Dh1.2 billion.
“Dubai’s real estate recovery appears to have continued in Q2,” according to a report by Emirates NBD Research.
And prices for almost all categories of housing rose April through June according to data from Cluttons. “Mid-range villa prices rose 18.5 per cent year-on-year last month, outpacing the 14.6 per cent year-on-year rise in high-end villa prices. Apartment prices rose more modestly, while price declines in the beleaguered low-end apartment sector have slowed,” the data revealed.
Total value of land transactions in Dubai grew 21 per cent to Dh63 billion in the first half of 2012, according to the Dubai Land Department . The department’s statistics reveal that a total of 18,953 transactions were recorded in the first half of the year, consisting mostly of sales, mortgages, land development, lease contracts and grants.
Sultan Bin Mejrin, director-general of Dubai Land Department , said these are important indicators of growth and strong performance of the market.
“The real estate market in the UAE is quite fragmented with Dubai already seeing greater stability and even growth in some cases for certain sub-sectors of the market. This trend is expected to continue for the remainder of the year,” Matthew Green, Head of Research and Consultancy, CB Richard Ellis (CBRE), Middle East, told Gulf News.
Echoing similar thoughts is Niall McLoughlin, Senior Vice President of Damac Properties. “Confidence is coming back to the Dubai market and investors are looking to capitalise on some great offers. We are set to see an increase in valuations throughout the rest of the year and into 2013,” he said.
Deflationary pressures are likely to persist during the second half of 2012 as new supply continues to outpace growth in demand and heightened competition aggravates already falling rents, CB Richard Ellis said in its latest report.
“On the flip side those situation in less desirable locations will continue to face challenges in maintaining occupancy rates and in attracting new tenants. For Abu Dhabi the development cycle is significantly behind Dubai, with the capital only now reaching the peak of its development cycle,” said CBRE’s Green. “As new supply emerges we expect to see further deflation of sales and leasing rates, although this will be moderate as compared to the declines that we have seen during 2009 and 2010, at the peak of the market downturn.”
According to a recent report, Dubai remains in the top performing 15 cities in global real estate sector and number one in the Middle East throughout the second quarter with buoyant Asian markets and resurgence in the main European capitals providing a stimulus for growth.
By Saifur Rahman Business Editor
Gulf News 2012. All rights reserved.
© Copyright Zawya. All Rights Reserved.
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