Developers fear new recession; bullish on UAE
Developers are dreading a global double-dip recession and keeping an eye out for any warning signals. Masoud Al Awar, CEO of Tasweek Real Estate Marketing and Development, said the motto for developers used to be “pretend and extend” — expanding their projects despite the market’s oversupply — while in 2011 that changed to “delay and pray”. “By delay, I mean waiting to see whether there is a double-dip recession in the world. Praying is hoping that there won’t be one.” Al Awad, however, said he was upbeat about the prospects of Abu Dhabi’s property market. “There are a lot of regulations in process in terms of registration and strata ownership, service charge laws, owners association laws, and financing and ownership procedures. The UAE will be a good medium of investment in real estate because it is in the forefront in the region,” he said.
“The outlook for Abu Dhabi’s property sector is very positive and there are opportunities available. Abu Dhabi’s total civic infrastructure and real estate projects are valued at around $254 billion (Dh932.9 billion), with around $183 billion in the execution phase.” Al Awad added that he expected the property sector in Abu Dhabi to attract foreign investment, especially given the country pitching itself as a safe haven.
“I expect there will be a mixture of increased — albeit cautious — local demand as well as foreign interest for good quality real estate, especially considering that the recent political uncertainty in the region has not affected the UAE, consequently reaffirming the country’s status as a safe haven,” he said.
Al Awad also said developers should ensure the two key ingredients of a real estate recovery — healthy returns and sustainable demand — were being encouraged. “If sustainable demand is not met, prices and rents will go down,” he said.
The UAE government has laid out the necessary infrastructure and transport facilities that make it suitable for developers to proceed with their developments, Al Awad stressed. Moreover, government initiatives have also been crucial in sustaining investor interest to improve the transport infrastructure in recent years. An example is the UAE’s $11 billion investment in the Union Railway project, which will connect all seven emirates.