Wednesday, June 17, 2009

Time ripe for long-term investors to re-enter UAE realty market

With the local and global banks re-entering the mortgage lending market, it is evident that UAE property market is re-gaining confidence of the financial sector, and few analysts believe that this may be the right time for long-term investors to re-enter the market.

James Gauduchon, the Manager-Corporate Marketing at Better Homes, a real estate company, said that confidence is re-entering the market, and it looks like the property market has begun heading upwards again.

The Head of Retail at the Dubai Bank, Mohammed Amiri, said that the classic pattern for any property market is a slow start upwards, then a period of manic buying, followed by slowdown and standstill. The market then changes direction, and prices would begin to head downwards, before collapsing into a new market bottom, after which, the cycle would move upwards again.

The Chief Executive Officer - Personal Financial Services, HSBC - Middle East and North Africa, Abdulfattah Sharaf, said that with the ease in lending and the attractive prices offered by the housing environment in the UAE, more end-users are grabbing the opportunity to own a home.

Following a 30 to 40 percent drop, the initial signs of stabilization in Dubai real estate sector have appeared, taking observers by a surprise, said Phillippe Dauba Pantanacce, Senior Economist, Standard Chartered Bank.

The volume of distressed stock has gradually diminished. The end of the freefall is an encouraging sign for Dubai and for Abu Dhabi, as it had a direct negative impact on the banking sector with higher defaults and non-performing loans.

Gauduchon said that the residential segment will be the first to recover, and commercial and retail sectors would soonfollow.

However, analysts advised caution, and said a further decline, particularly in few segments of the market, cannot be ruled out. The returns for properties that are away from the desert, will be more than the off-plan projects or those in obscure locations.

On the whole, completed high-quality properties that are competitively priced and in prime locations, will continue to generate more demand and value than others, said Suvo Sarkar, Executive Vice President and General Manager - Retail Banking at Emirates NBD, the region's largest bank in terms of assets.

Traditional real estate near the sea or in the middle of the town will be worth more in the long-term. The next few years, would be the best time for investment for long-term players, he added.

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