2014-01-04 04:07:20 - New Business market report from Business Monitor International: "United Arab Emirates Real Estate Report Q1 2014"
BMI believes that the real estate sector in the United Arab Emirates (UAE) will continue its post-crisis recovery in 2014, due to strong demand and continued construction. We predict rental rate increases in all three cities covered by this report, with the exception of a slight contraction in office and industrial rental rates in Abu Dhabi.
Sentiment towards the real estate market across the UAE has been improving significantly over recent quarters, with the consensus being that 2014 will continue a turnaround in a sector previously blighted by oversupply, instability and the hangover of a burst property bubble. Economic activity across the UAE is likely to remain relatively robust, as consumption and investment patterns continue their growth from 2013. This economic
growth will strengthen both property fundamentals and capital markets in the UAE, resulting in a more favourable outlook for tenant retentions, rental growth, development activity, financing and asset values.
Full Report Details at
- www.fastmr.com/prod/759050_united_arab_emirates_real_estate_repo ..
The retail sector remains the strongest in the UAE, boosted by Dubai's status as an international city and a tourist destination. Industrial does not show any growth, but makes up for it with incredible stability and high prospects for the sector now that the 2020 World Expo host has been announced (Dubai). The office sector remains the weakest, with Dubai and Abu Dhabi having vacancy rates well over 30%.
The UAE's various real estate sectors are developing in different directions and at varying rates, with Dubai and Sharjah outperforming Abu Dhabi. While undergoing improvements, the commercial market in general continues to suffer from oversupply and is forecast to undergo limited growth in the short term. However, BMI believes the market reached its nadir in 2012 and that positive sentiment growing around the sector (as shown by our data) will see continued growth in 2014, providing economic fundamentals remain on course.
* US-based property services firm CBRE has reported that prime retail rental rates in Dubai rose by between 5% and 6% in Q213, according to Zawya. Some shopping centres in the emirate are between 90% and 100% occupied, which is pushing up prices. New projects are underway, with 48,000m2 of mall space to be released onto the market by the end of 2013 and a further 144,000 square feet expected in 2014.
* Property investors and sellers in Dubai have rushed to complete purchases following the Dubai Land Department's announcement that it would implement a 4% selling fee. Transactions were worth more than AED5.1bn (US$1.4bn) on September 29 2013, ahead of the implementation of the increased charge on October 6 2013. The Dubai Land Department previously enforced a registration fee of just 2%, but hopes the inflated figure will deter speculation in the property market.
* The Dubai International Financial Centre (DIFC) has announced that it is seeking property firms to develop 17 buildings in joint ventures, according to Bloomberg. The DIFC will contribute the land, while developers will finance construction on the projects, which are expected to be worth a total of AED15bn (US$4.1bn). The developments are planned to be 65% office space with the rest residential and retail, as well as one hotel. The area is a tax free zone, meaning it has lower office vacancy rates than the rest of Dubai.
* Real estate developers in Dubai, United Arab Emirates are taking a more 'mature and considered' approach to new business in an effort to avoid another residential property bubble, reports Khaleej Times. A corporate debt crisis was triggered in 2008 when property prices crashed by over 50%, although the real estate sector in Dubai has been steadily recovering since this incident. Since then, affordable mid-market residential properties have been among the best performers, while the retail, hotel and industrial sectors have also experienced solid growth.
* The UAE will have 192 towers that are more than 150 metres high by the end of 2015, according to the Council on Tall Buildings and Urban Habitat (CTBUH). Dubai will be home to 149 of these skyscrapers, while Abu Dhabi will have 32. Sharjah will have eight skyscrapers, Fujairah two towers and Ajman one 150-metre-plus tower. Overall, the Middle East will have 289 skyscrapers higher than 150 metres by the end of 2015.
* Dubai's key commercial real estate markets are witnessing growth on the back of improved economic conditions that are leading to increased occupier demand, according to a report by UK-based real estate consultancy Cluttons. This growth is focused primarily on centrally located sub-markets, such as Jumeirah Lake Towers, Barsha, Business Bay, Downtown Dubai and DIFC. On average, prime office rents have increased by 8.1% to AED200 (US$54.45) per square foot between Q113 and Q313. According to the report, there are some submarkets where Grade A prime stock is still available for as low as AED150 (40.84) per square foot.
Key BMI Forecasts:
* We predict a 5% decrease in office rental rates in Abu Dhabi, but a 5-10% increase in Dubai and a 10% increase in Sharjah.
* Retail rental rates will increase in Abu Dhabi (3%), Dubai (5%), and Sharjah (15%) in 2014, according to BMI.
* Industrial rental rates will decrease by 2% in Abu Dhabi in 2014, and will remain stable in Dubai and Sharjah.
* Net yields will remain at 2013 levels in all cities and sectors surveyed by this report.
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