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Dubai improving in some areas but not all
The Emirate's real estate market is moving away from one holistic model
October 1, 2012 1:56 by Muhammad Aldalou
One can’t argue that Dubai’s many agencies are very keen on sending out fluff pieces left and right aimed at promoting the Emirate’s many industries, but whether that’s part of the on-going scheme to shine the brightest spotlight on the Middle Eastern city’s latest goals and achievements or just reporting the truthful growth of various sectors, is for the general public to decide.
Nonetheless, as long as a piece isn’t fighting to promote cooking the world’s biggest pancake, Kipp safely feels that echoing the positive forecasts of real estate growth, construction progress or even the 120 people queuing for hours outside of Nakheel’s sales office to get their hands on the latest property bargain, will produce a positive effect and improve investor sentiment. And who wouldn’t want that?
Jones Lang LaSalle, in their latest report covering the third quarter of 2012, has predicted a particularly selective growth for Dubai’s real estate sector. Rents and property value are rising but almost only in the prime areas of the city. The market in Abu Dhabi, as mentioned in the JLL report, remains slightly fallen behind, but investor confidence in both emirates could be much worse.
“The overall market still faces challenges of high new supply and limited demand for secondary assets, that is providing tenants and occupiers with significant choices,” reports Craig Plumb, JLL.
Alan Robertson (JLL CEO) admits that while market sentiment continues to improve, there is definitely movement away from one holistic model. Before the global crisis struck down the UAE’s real estate industries (among others), market sentiment could easily be seen improving on a macro scale but that’s hardly the case anymore.
“As the market continues to mature we will see more divergence. Well managed, high quality assets in prime locations will continue to perform whilst those in secondary locations will need to be ever more creative to attract and retain tenants who now have ever more choice and are moving with their feet to source and find the best deals available,” Robertson added.
Kipp has been observing the real estate market and we must admit, the investment side of the real estate market has been rather shy with no major open market commercial transactions reported.
“On the investment and development fronts, we expect to see more major deals announced in the weeks and months ahead, reflecting the improved economic climate. However we also expect the market to move away from a construction led environment to one more focused on asset management as owners look to safeguard their investment and drive rental growth.”