• Home
• Real Estate
• News Article

UAE's real estate sector rebounds in 2010

Construction sector also picks up after sharp slowdown in 2009
The UAE's real estate sector rebounded into growth in 2010 after recording one of its largest falls in 2009 because of the 2008 global fiscal distress while construction activity also sharply picked up, according to official data.

After plummetting by nearly 18.6 per cent in 2009, the real estate sector recovered by around 2.5 per cent in real terms in 2010, showed the figures by the National Bureau of Statistics.

Growth last year was almost equivalent to the 2.5 per cent increase in 2008 but far below the 15.9 per cent growth recorded in 2007, the report showed.

In current prices, real estate growth rebounded to around 1.6 per cent last year after plunging by nearly 15 per cent in 2009. It expanded by about 13.1 per cent in 2008 and leaped by around 36 per cent in 2007.

The report gave no reason for the 2008 decline but experts said it was caused mainly by a drop in property prices after they climbed to record levels through 2007 and most of 2008 before the sector was hit by the global crisis.

The report also showed the construction sector, one of the largest component of the country's GDP, also recorded strong recovery in 2010, when it expanded by 8.6 per cent in real terms compared with 1.3 per cent in 2009. Growth was at one of its highest levels of 10.2 per cent in 2008 and 9.9 per cent in 2007.

In current prices, the construction sector also grew by about 8.6 per cent after shrinking by nearly four per cent in 2009. It had jumped by about 28.8 per cent in 2008 and 30.8 per cent in 2007, according to the report.

The figures showed the real estate sector's contribution to real GDP grew from Dh95.7 billion in 2006 to Dh111.1 billion in 2007 and Dh114 billion in 2008 before slumping to Dh92.7 billion in 2009. It rebounded to Dh95.1 billion in 2010.

In current prices, it leaped from Dh81.5 billion in 2006 to Dh111.1 billion in 2007 and Dh125.6 billion in 2008. It dived to Dh106.6 billion in 2009 but rebounded to around dh108.4 billion in 2010, the report showed.

The construction sector's contribution to real GDP expanded from Dh86.1 billion in 2006 to Dh94.7 billion in 2007, around Dh104.4 billion in 2008, Dh105.8 billion in 2009 and nearly Dh114.9 billion in 2010.

In current prices, it soared from Dh72.4 billion to Dh94.7 billion in 2007 and Dh122.2 billion in 2008 before dipping to around Dh117.2 billion in 2009. It climbed back to nearly Dh127.3 billion in 2010.

Recent figures by the central bank showed bank credit to the real estate sector picked up in 2010 but lost momentum in the first quarter of 2010 apparently because of the negative effects of the current political turmoil in the region.

The figures showed the slackening growth in lending to real estate and other sectors was in sharp contrast with the massive rise in deposits with banks as they swelled by more than Dh50 billion or around 5.3 per cent.

From around Dh163.1 billion at the end of 2010, real estate mortgage credit receded to about Dh159.7 billion at the end of March, the figures showed.

The decline followed a recovery in such loans by around Dh22 billion through 2010 compared with nearly Dh16 billion in 2009, when the sector was hit hard by the 2008 crisis after years of boom caused by high oil prices.

Mortgage lending activity hit an all time high during 2008, when credit leaped by nearly Dh69 billion from Dh56.4 billion at the end of 2007 to Dh125.8 billion at the end of 2008, a staggering increase of about 123 per cent.

The activity was also at its peak through 2007, when real estate credit nearly doubled to around Dh56.4 billion at the end of the year.

© Emirates 24|7 2011