Friday, January 09, 2009

Experts predict rental growth in Dubai, Abu Dhabi, but, at slower pace

Rental demand will remain robust this year, but will increase at a slower pace in 2009, predict industry experts. The officials also expect a drop in residential rents in Dubai and Abu Dhabi.

The Chairman of Chamber of Commerce and Industry, Salah al Shamsi, said that rents are likely to drop between 10 and 15 percent in Abu Dhabi during second half of this year, and may fall even further during 2010, with several new units likely to appear in the market.

A study conducted by Truth Economic Consultants, revealed that 72,285 units would hit Abu Dhabi market by 2008-09, out of which 37,851 units would be available in 2009.

Al Shamsi said that rents and value of property have not yet been affected by the global crisis, and the prices have not fallen as much as in other emirates, probably due to high demand for residential units in Abu Dhabi.

However, experts say that rental demand in Dubai would grow at a much slower pace than before. The Chief Financial Officer of Landmark Properties, Charles Neil, when speaking to the media said that although rental prices are likely to remain stable in 2009, they will initially soften during the first and second quarter.

The Managing Director of Asteco Property Management, Andrew Chambers, when speaking to the media, said that there still exists strong demand for rental properties across all emirates including Abu Dhabi and Dubai, as the two emirates are already witnessing scarcity of readily available units.

The real estate agents in Dubai state that in 2008 the villa market in UAE has seen maximum increase in rental prices due to limited availability of villas.

Several real estate experts including Asteco's Chambers, Landmark's Neil, and Cluttons' Macfarlane, CEO of Wasl HEsham Al Qassim, and Dubai Real Estate Corporation have all said that rental yields in UAE have remained attractive in comparison to international markets.

However, the market is now more demand-driven, and keeping up to customers expectations would be the key for growth in future, they said. The experts advised that investor should carry on research and invest in buildings with design elements, finishing and layouts preferred by customers, apart from areas only preferred by end-users.

1 comment:

sunil said...

correct me if i am wrong, but how does a big decline in jobs help increase rental demand?

dubai does not grant citizenship/nationality status. so when jobs are gone, so are the people. dubai's backbone was built on immigrants coming to dubai for work. but if there is no work, what makes this claim sustainable in 2009?

it is early and my feeling is that this projection will take an upside down turn. there will be a declining job market which will lead to a declining real estate market.

unlike the US where the property market caused the collapse in the job market, it will be the other way around in dubai and UAE in general (though not as severely as in Dubai)