Friday, November 13, 2009

Property market recovery is dependent on supply-demand factors

The UAE property market, which largely focuses on Dubai and Abu Dhabi, will take a couple of years to recover from the financial crisis, said J.P. Grobbelaar, the Director of Research and Advisory at Colliers International, the leading real estate consultancy.

High speculation levels in residential and commercial properties, prior to onset of crisis, had exaggerated the downturn, he commented on the second day of the Ministry of Economy-sponsored Abu Dhabi Outlook Summit.

The downturn in property market was expected, although it was not meant to be so severe. The correction is actually good for the market, as the market is now returning to fundamentals, Grobbelaar said.

According to Grobbelaar a healthy recovery of property market will depend on factors such as supply and demand that the developers are relying on more now, rather than speculation.

Rentals for residential properties in Dubai have fallen 38 percent since the beginning of the year, while Abu Dhabi has seen 18 percent decline.

Analysts state that the recent increase in investor activities in both markets are an evidence of initiation of recovery.

"The market is being driven by excess liquidity and easy monetary policy. With the interest rates being considerably low, coupled with depreciating currency, money is flowing out of banks into real estate and property," says Majid Azam, analyst for HC Securities - MENA (Middle East North Africa) region.

An oversupply of residential units in Dubai and an undersupply in Abu Dhabi is causing a spill-over impact and transforming both markets into one, he added.

2 comments:

Dubai Property said...

Is the government taking any steps to prevent or to control this spill over supply demand? Many experts says that Dubai property has started to stabilize and many developments plans are being carried out now.

Dubai Property Rentals said...

Our website has a list of all the commercial and residential areas that have Dubai property for rent.