The UAE’s real estate sector is enjoying a steady uptrend in the first few months of 2013 market characterized by more consistency and consolidation within the primary markets of Dubai and Abu Dhabi, according to Masood Al Awar, CEO of TASWEEK Real Estate Marketing and Development which released its latest market intelligence report recently. TASWEEK predicts a sustained rebound within the next months driven by rising confidence in the Dubai market and strong market fundamentals in Abu Dhabi.
More responsive legislation and robust real estate laws are also expected to quell local fluctuations on services and returns across industry. Al Awar notes that there are some concerns that must be addressed in order to sustain organic growth, such as affordable housing and varying financing options for real estate customers.
The past year saw a fluctuating 5 to 12 per cent slide in Abu Dhabi rents due to the entrance of new units all over the emirate. Major initiatives such as new regulations on housing allowances for government employees, the announcement of key government-backed projects and an AED 330 billion local stimulus package are expected to accelerate demand and market growth in Abu Dhabi for 2013, though.
More industry consolidation has been observed in Abu Dhabi after the merger of major developers Aldar and Sorouh. Consolidation is expected to extend beyond companies and towards government entities and projects as well. Upcoming rollouts such as 200 villas in Al Reef Contemporary Village and a Mosque, Community Center and mini-market in the Mediterranean Village will further boost the market. Other projects slated for opening in the coming years, such as ‘The District’ retail destination in Saadiyat Island and the mixed-use Sowwah Central in Al Maryah Island will further strengthen Abu Dhabi’s real estate claim.
Another trend to watch out for is Abu Dhabi’s lead in sustainability integration in light of Masdar activities and Estidama regulations. Sustainability initiatives in 2013 are expected to be small-scale, though, as owners have not yet fully embraced ‘green’ leases. Overall, the Abu Dhabi property is expected to sustain its market momentum, especially with the local Government pledging AED 6 billion per year to boost economic activity.
While residential rents in Dubai rose 7 to 10 per cent over the past 3 months, the emirate has been able to maintain its popularity as a preferred destination offering flexible payment schemes. Experts forecast a 10 to 17 per cent increase in rental rates across the Dubai market in 2013, driven by several new project announcements made in late 2012. The emirate’s recent posting of a 34-month closing high on its stock market index bodes well for its investment outlook. Barring major construction delays, around 36,000 new apartments and villas could go online from 2013 to 2015. Amidst broad options, Dubai tenants are expected to go for localities offering quality units and amenities.
Most of the residential supply is expected in locations including Dubai Land Residences, Motor City, Dubai Sports City, and Liwan. Looking forward, major developments in the pipeline such as the AED 6 billion Blue Waters Island and an AED 3.67 billion hotel and branded serviced apartment project in Downtown Dubai and the announcement of an AED 3.67 billion investment influx by Investment Corporation of Dubai (ICD) and Brookfield Asset Management reflect the resurgence of Dubai’s property market.
Nationwide, the recent announcement of planned property regulations aimed at settling down prices and eliminating market speculation has prevented what could have been a spiraling of rents in 2013. The UAE Central Bank has declared that a proposed cap on mortgage lending - for expatriates at 50 per cent of the property's value and 70 per cent for UAE Nationals – will be discussed during the second half of this year.
The adoption of more transparent approaches for service charges and operating costs arrangements is also highly anticipated that will significantly reduce the number of rent disputes.
Al Awar added that this year will build on the transitional nature of 2012 to make the UAE property markets more robust and sustainable. He advised all sector players and stakeholders to closely monitor market movements to take advantages of opportunities that are quickly arising in what TASWEEK believes will be a watershed year for the business.