Tasweek: UAE market showing positive signs of maturity that are shaping up sound market fundamentals
Tasweek Real Estate Marketing & Development, a property adviser and solutions provider in the Middle East, has recently released its latest analysis on the UAE’s real estate market. Tasweek has based its research on emerging factors that are influencing the stability of the UAE market, which include pricing; facilities, amenities, project quality, infrastructure, financing, transparency, and location differentiation.
Abu Dhabi has witnessed a continuing increase in supply levels as demand in the emirate remains upbeat. Property development in Abu Dhabi is around two to three years behind Dubai and this is one of the key reasons why property demand has been more robust in the UAE capital compared to Dubai.
There are still signs though of falling rental rates, reduced sales or transactions, or a “watch and wait” attitude from investors. Nonetheless, all indicators point towards the maturity of the real estate sector in a positive way, which is shaping up fundamentals of retain on investment for the real estate industry.
The expected growth of facilities management capabilities and services in Abu Dhabi will be a key factor that will improve property values both in terms of rental and prices. The hospitality sector is likewise expected to sustain stable occupancy levels and operating performance, leading to a positive growth trend starting in 2011 where Abu Dhabi will definitely see more hospitality, tourism & industrial growth.
Higher quality and more affordable property choices in the office, retail and residential markets are now widely available in Abu Dhabi, a trend that will influence the mood of property buyers and investors, who are now more circumspect when investing in real estate.
Dubai has now passed through the peak in the construction cycle, with many projects delayed and at least 115 officially cancelled according to recent reports. New supply in 2011 will therefore be lower compared to 2010. As mentioned earlier, enhanced facilities management capabilities and the growing availability of more affordable high-quality properties will serve as the new catalysts for growth. Affordability and better quality living are now the key selling points as these are now among the main considerations of property buyers and investors.
Despite the slowdown in the past two years, the long-term prospects in Dubai’s property market remain upbeat. Moreover, the country has one of the highest levels of per capita transport infrastructure spending globally, highlighting its edge in investment in the broader MENA region. This will certainly stimulate growth and open the path towards market recovery starting in 2011.
The UAE has already announced up to USD 45 billion worth of future projects, including increasing expenditure in major transport infrastructure that will help fill development gaps in the country.
There are positive signs indicating that the UAE’s real estate sector is now stabilizing, as the experience and the lessons learned in the past two years have resulted in key improvements that have helped fast track the recovery process. Strong government support has likewise been crucial in reducing the negative impact of the downturn, keeping the country on track with its long-term real estate development plans and protecting its status as a real estate leader in the region.
Moving forward, the main task for the UAE now is to focus on scaling new heights. The biggest challenge, however, will be to improve real estate financing and legislation, which will be crucial in strengthening confidence in the UAE market.
Rewards look very promising down the line, particularly within the next three years as transparency and confidence gradually return to the market. Real estate investments, nonetheless, should be made based on rigorous due diligence and by those who can confidently secure their capital and future income.