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Are property cowboys jumping the Gun?
UAE realty may be slightly improving, but it is still too early to uncork the bubbly thinks Eva Fernandes
July 18, 2011 4:02 by Eva Fernandes
Kipp does so hate to use the term “LOL” (laugh out loud-if you’ve been hiding under a rock till now). The reason being, we so rarely ever laugh out loud at anything—unless of course you’re Julia Roberts and you like laughing with your jaw hanging 180-degrees from your skull showing off your full set of mandibles. The most we may do when amused, is crack a smile, because we tend to internalise most of our reactions when we are engaged in private activities. But today, might just have been the exception to the rule.
Earlier this morning when we were perusing through the local dailies we saw a story titled “Gulf pours money into UAE realty” in trusty old Gulf News. Intrigued that this might be a satirical op-ed, we read on with a serious face. We cracked up at the lead: “The UAE remains an attractive destination for GCC nationals to invest in real estate because of its developed regulatory systems and value for money properties, industry analysts said yesterday.”
Ah, so GN was being serious. Attractive destination for investment? Hmmm, what part of the ambiguous investor visa is attractive? You know the one, the visa which was recently extended to a generous (not) period of three years, which has still left investors wondering what the visa will entitle them too? Though we were promised an explanation, Kipp is still in the dark as to whether the investor visa will allow one to open bank accounts and apply for a driver’s license.
But let us not come down on too harshly without giving the piece a chance. let’s consider the argument. As the article has it, the UAE Ministry of Finance has released new numbers which show an increase in the number of registered real estate contracts held by Gulf nationals in the UAE. According to the statistical report on the Gulf Common Market the number of contracts had increased to 4,604 in 2010 from 4,024 the previous year. Not quite “pouring” into the UAE, more like “trickling” in, then.
And why wouldn’t they? Consider the latest report from JLL (Jones Lang Lasalle) that found “residential property prices are rising slightly in certain areas of Dubai,” and that “most neighbourhoods are still seeing price declines as new supply continues to impact the market.”
With 2000 homes in Dubai being completed in the second quarter of 2011, JLL predicts that by the end of 2011 another 18,000 will be ready for occupancy bringing the total residential stock will increase to around 322,000 homes.
A WELL SPREAD NOSEDIVE
“That is just Dubai” you may think as you dismiss our disparaging ways but things aren’t going so well for our southern neighbours as well. A recent JLL report has found that rents for “inferior quality and old buildings” in Abu Dhabi fell 10 to 15 percent in the second quarter 2011 with a recovery not looking likely for another six months. In its report JLL noted “compared to alternative markets such as Dubai, rents in Abu Dhabi are still relatively high, but large amounts of upper segment supply handovers will continue to push rents down across the capital throughout 2011 and into 2012.”
So there you go. It’s another thing to look at things as a glass half-full but “pouring” over laboured optimism is a whole other issue. Perhaps, some people at Gulf News ought to their optimism in check.