Friday, March 27, 2009

Middle East property sector shows signs of recovery

According to a new report by Jones Lang LaSalle, the real estate market in the Middle East and North Africa are showing signs of recovery, although the prices in the region may continue to fall during the next six to twelve months.

The first quarter of 2009 has shown some progress in the sector, with green shoots of recovery beginning to crop-up. However, the necessary conditions for recovery are yet to be met, the report points out.

The major factor for recovery of the sector are improved sentiment which would boost confidence and reverse the credit default spiral, which has been widely experienced during the past six months.

According to the report, Dubai lays out vast options for opportunistic investors, given, the correction in prices happening in the emirate. Although the yields can be hoped to increase only in the medium term, the long-term outlook for Dubai continues to remain positive, particularly, with the decline in supply, as several projects are being put on hold or are scrapped off.

The "green shoots of recovery" in the regional property sector was noticed during the first quarter of the year, and the markets are hoped to be in the process of recovery as early as in the autumn, revealed a property consultancy, in its report.

The Jones Lang LaSalle report states that the Middle East and North Africa (MENA) economies have begun making progress on 12 out of 17 major requirements for the economic recovery, which includes re-capitalization of Banks, Reduction in future supply of homes, and "concerted government action".

However the economies may still have face serious challenges during the year. Even with so many positive factors noticed during the past three months, the region may still be in the recession stage, with several markets expected to witness downward correction in prices during the year, the Jones Lang LaSalle report states.

However, Abu Dhabi indicates chances of "significant long-term potential", while Dubai has opened up to "opportunistic investors" seeking medium-term and long-term investments. In the meantime, Qatar and Saudi Arabia would remain as the most lucrative markets during this period, the report suggests.

The company expects that following the transition phase, the region will be well-positioned to emerge stronger, with more transparent and better regulated sustainable pattern of real estate development and investment, meant for the longer term.

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