Rear-seat kickers? ‘Aromatic’ people? Maybe a Chatty Cathy? Read on…August 19, 2015 12:55
Year of the tenant? 2012 Predictions for UAE’s Property Market
Kipp breaks down real estate experts Jones Lang LaSalle’s top predictions for the UAE Realty in 2012
January 22, 2012 3:58 by Eva Fernandes
‘Asset Specific’ and ‘Realism’ were two of the catch phrases of the annual Jones Lang LaSalle Top Trends predictions for 2012. In this article we break down what JLL’s predictions may mean for you.
JLL predicts that the UAE realty scene, once known for being over the top (not to forget At The Top), will finally be sobering down. So instead of building skyscrapers that are the ‘tallest in the world,’ JLL predicts a significant shift towards mid-market developments both in the residential sector as well as in the hospitality sector. In addition, JLL expects banks will become more selective on lending criteria and developers will look to consolidate more projects and, (wince) cancel more projects. Currently, RERA has already cancelled over 220 projects in Dubai. In keeping with the theme of realism, however, JLL forecasts 2012 will see a lot more cancellations as RERA and the Abu Dhabi government looks to reduce future supply.
One of the reoccurring themes in UAE Realty is that of ‘oversupply.’ And in case you were hoping for us to tell you otherwise, we are sorry but it looks like 2012 will be going pretty much the same way. With both the office and residential sector to see significant amount of new supply in both Dubai and Abu Dhabi in 2012, it is only Dubai retail and Abu Dhabi hotels that are scheduled to see reducing levels of new supply. One cannot forget the launch of Tayseer and Tanmia, which are government initiatives that aim to restart work on stalled projects.
With the market becoming more diverse this 2012, JLL experts say it is increasingly difficult to outline overall trends—rather the focus is more asset specific. With some rents going up, some going down the safest thing to predict is (rather obviously) that those real estate projects that will be in demand this 2012 are well designed schemes, well managed, well located in areas of completed infrastructure. And though perhaps the asking rents will not necessarily go down for many tenants, the ability to negotiate and take advantage of leasing incentives (like rent free periods) means that 2012 will be the year of the tenant.
Though from the outset, a prediction that ‘tenant is king’ may seem like an ominous prophesy, JLL say it will benefit the UAE. Cheaper office lease makes Dubai and Abu Dhabi a more attractive place to set up shop and operate out of.
Hotels in Dubai and Abu Dhabi
Perhaps another interesting aspect of the 2012 Predictions from JLL, is the observation of the hotel sector in the two Emirates. To quote JLL: “After experiencing significant swings in performance from 2007 to 2010, performance of the Dubai and Abu Dhabi markets diverged in 2011 (with RevPAR growth of 6.4 percent, in Dubai and dip of 7.2 percent in Abu Dhabi). The same pattern is expected in 2012 with modest growth in Dubai, while new supply levels will see performance soften further in Abu Dhabi.”
It is interesting to note that while Abu Dhabi supply of rooms for 2012 has been on the rise for the past few years, the rather sophisticated tourism infrastructure of Dubai makes it a more attractive tourist destination, at least for 2012.