Monday, June 06, 2011

Dubai properties to see stability in values, while Abu Dhabi may see decline

The real estate sector in Dubai will witness stability in capital values, while Abu Dhabi will witness highest value declines in next one year, says the Jones Lang LaSalle (JLL) survey report.

The global property consultancy, in its 2011 MENA Real Estate Investor Sentiment Survey Report, revealed that although Dubai has already crossed its supply peak, Abu Dhabi is still approaching the peak of supply cycle. Therefore, the rents and sale prices in the Capital are likely to go down in the coming year.

The survey respondents include top 30 financial institutions investing in regional real estate markets. The respondents are of the belief that Dubai rents will also continue to fall, but the rate of decline has slowed down considerably, with some locations and sectors having already hit their bottom.

The survey showed investor interest for all asset classes in Abu Dhabi, although the interest was strongest for residential sector. In Abu Dhabi and broader region, investors are expecting opportunities in middle income housing segment.

MENA-based investors have also expressed interest in residential sector, particularly for low and mid-income housing, which were neglected during the boom period. Regional developers and investors are eyeing opportunity to partner with local governments to develop affordable housing. Abu Dhabi has already been in the forefront in this arena.

Meanwhile, 75 percent of respondents agreed that they plan to increase their investment level in the MENA property market in next one year. Although they expressed interest for all asset classes, office is the preferred sector for investment, with particular focus on completed and operational properties, supported by long-term secure income streams. In Dubai and Saudi Arabia, logistics and light industrial sector too emerges as another target sector.

As for investment strategy, MENA is the geographic focus, with 67 percent of respondents planning to acquire regional assets in next one year.

No comments: