Sunday, August 19, 2012

Dubai realty market on strong recovery path, albeit at slow pace


After four years of having faced the impact of worst ever global economic crisis in September 2008, which led to halting of most of the development activities, the real estate market in the UAE is now showing signs of recovery.

With support of structured cash injection, careful re-engineering of major development companies, and re-scheduling of projects and debts, the sector is likely to rebound, although at a slow pace, experts said.
According to the latest report by Jones Lang LaSalle (JLL), leading real estate consultant, the overall residential market indicates a positive trend, with villa market continuing to outperform the apartment sector during the second quarter of 2012.

The real estate sector has begun to show signs of improved investor confidence with increase in demand for quality properties in ideal locations, and income producing assets. Such prime residential buildings in established locations are seeing improved performance, although secondary locations are suffering from rental and pricing declines.

Except RAK properties, all publicly listed real estate developers have shown strong growth in the second quarter of the year. Emaar Properties recorded 45 percent increase in net profits, Aldar Properties recorded 228 percent jump in net profits during second quarter of the year, while Sorouh Real Estate recorded 29 percent increase than during the same period a year earlier.

According to Emirates NBD Research, the real estate recovery in Dubai appears to have continued in Q2. The prices for almost all sectors of housing also increased during the period April to June this year.

The data by Cluttons reveal that mid-range villa prices grew 18.5 percent year-on-year last month, surpassing the previous 14.6 percent year-on-year growth. The prices of apartments also grew modestly, while price declines in the low-end apartment sector have slowed down.

The Dubai Land Department showed that total value of land transactions in Dubai grew 21 percent, touching Dh.63bn during first half of 2012. The Director-General of Land Department, Sultan Bin Mejrin said that these figures indicate the strong growth and performance of the market.

The Head of Research and Consultancy at CB Richard Ellis (CBRE) Middle East, Matthew Green, said that UAE property sector is quite fragmented and Dubai is already seeing improved stability and growth, and this trend is likely to continue for the rest of the year.

The Senior Vice-President of Damac Properties, Niall McLoughlin, said that confidence is returning to Dubai market, with investors seeking to capitalize on great offers. An increase in valuations are likely although this year and in 2013.

However, for Abu Dhabi, the development cycle is considerably behind Dubai, and the market is only now reaching the peak of its development cycle, CBRE said in its report.

A recent report said that Dubai continues to be one of the top performing 15 cities in global real estate sector, and number one in the Middle East, all through the second quarter, while the Asian markets and European capitals also indicate resurgence and growth stimulus.

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