Tuesday, November 03, 2009

Complete recovery of UAE property market likely in three years

With the property prices yet to hit the bottom, and the banks still being reluctant to lend, the total turnaround in the UAE real estate sector will not happen until the next two to three years, says a management consultant company.

According to Dr. Reinhold Leichtfuss, Senior Partner and Managing Director, Boston Consulting Group - Middle East, the property market in the UAE, along with other emerging markets will continue to be volatile, as it is difficult to predict exactly when or what sort of turnaround it will be for Dubai.

According to Leichtfuss, there has been a pick-up in rentals for residential flats/apartments during the last quarter, particularly in quality destinations, although there still exists the possibility of decline in prices.

The global downturn had affected the once-booming property sector of Dubai, bringing down the property prices to more than 50 percent from their peak levels in 2008.

Investors and developers are still pinning hopes on a global economic recovery to revive interest in the sector, but, the prices will continue to remain flat, if not going down further, as the supply will be further strengthened by the new projects that are likely to hit the market by end of this year and in 2010.

Leichtfuss agrees that there has been a slow increase in return of people into the market, as there is a huge supply to begin with. Rents have marginally increased in few areas, but with the new supplies coming in next year, it is to be wait and watched as to how it will be next year.

One major cause could be due to the fact that banks are still hesitant to resume lending, and for banks that have, the criteria have become more stringent. Financing continues to be expensive and unavailable for people who wish to purchase during the downturn.

According to Leichtfuss, the recovery of real estate sector could be accelerated by real estate funds that give investor access to the market, and benefit from the upside of investing in otherwise defaulting properties.

1 comment:

Dubai City Information said...

right, again, speculation. what is this based on? fundamentals are very weak in dubai. heck half of dubai has been sold to abu dhabi, so on what basis investors are shedding cash? if they are at all that is. property rise in dubai is a LONG term discussion, if at all.