BULLS VS BEARS | UAE Property Outlook
David Dudley, International Director
and Head of Abu Dhabi Office at JLL MENA
It’s A Correction Not A Major Crash
The current slowdown in the UAE real
estate market should be seen as a minor
correction as opposed to a major crash.
While the impact of reduced oil prices
on the economy will lead to a short-term
slowdown in demand, this is occurring
at a time of minimal supply completions
leading to relatively stable market
conditions. The market experienced a
major upswing from 2013 to 2014, led
by the residential sales market, with
prime residential prices growing at
25% per annum. This pace of growth
was unsustainable. The current phase
is a slowdown and a relatively minor
correction, rather than a major crash –
with reduced supply coming through
at a time of weak demand, allowing
underlying dynamics to catch up with the
pace of value growth.
Selective Funding
While liquidity has tightened, funding
is still available for project finance and
corporate level lending – it is just more
selective. The good news is that demand
growth continues from projects that
started when oil prices were strong.
Developments such as the airport
expansion or the growth of Etihad Airline
have an economic multiplier effect,
ensuring continued GDP growth, albeit at
a reduced pace.
Abu Dhabi Property Law To Bring
Opportunities
The new laws place greater responsibility
and regulation on developers, which will
inevitably suppress supply growth. This
will help reduce the risk of over-supply
in the current period of weaker demand;
however the key will be to allow sufficient
supply to come through to maintain a
healthy balance between supply and
demand to keep rents and prices at a
competitive level. The good news is that
demand growth continues from major
capital projects that started when oil
revenues were strong. Projects such as
the airport expansion, the growth of
Etihad Airline and other major tourism
attractions, including The Louvre Abu
Dhabi have an economic multiplier effect,
ensuring continued GDP growth.
Matthew Green, Head of Research
& Consultancy, CBRE, UAE
Market’s Become Flexible
The slowdown in activity within the
residential sales environment has
certainly encouraged more flexibility in
the market, although this has broadly
come from developers through waiving
of registration fees and offering of more
flexible payment plans to investors.
A Long Term Investment
As with any market, there are potential
risks when purchasing a home in Dubai,
particularly when utilising bank finance
in a country where visas are linked to
your employment. Given the uncertain
economic environment in the region
at this time, security of employment
has been identified as a key concern,
April 2016 | www.wealth-monitor.com
specifically for expatriates working in
the oil and gas sector and in some parts
of the public sector. However, whether
it is in Dubai or any other international
market, real estate should always be
viewed as a long term investment, and
should be considered within your means.
Demand For Off-Plan Slows
As was the case during 2006-2008, there
was significant interest in off-plan sales
during the last boom cycle from 20132014, particularly for units from high
profile developers such as Emaar, DPG,
Deyaar and Damac. However, since the
second half of 2014, demand has slowed
considerably as investor sentiment has
turned negative amidst the onset of
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