Only way for the UAE property market is up now

IIF says market appears to have bottomed out; However, Rasmala, Arqaam expect further fall

The real estate market in the UAE appears to have bottomed out, according to the Institute of International Finance (IIF).

“The real estate market in the UAE appears to have bottomed out, and significant progress has been made in corporate restructuring and in governance. The main catalyst of the projected solid growth next year is the expected turnaround in the real estate market,” the Washington-based institute said.

Real estate residential prices in Dubai and Abu Dhabi have dropped by about 60 per cent and 50 per cent, respectively, since their peak in 2008, IIF believes that data for the first three quarters of 2011 suggests that the market may have reached its bottom.

Contrary to this is the analysis of investment banks and global property consultancies.

Rasmala Investments’ senior real estate analyst Saud Masud had told 'Emirates24|7' on September 27 that prices will continue to trend down as per their long standing view.

“We expect another 20-30 per cent decline in next two years as supply will likely erode market values. We don't expect very robust asset price inflation in any one market in the foreseeable future," he said.

He told Bloomberg recently that prices won’t show any “meaningful recovery” in the next five years.

Earlier this week, Arqaam Capital said that the UAE’s beleaguered property sector hasn’t bottomed out yet and property prices and rents may drop a further 20 per cent this year and next because of excess supply.

“We think there is a further leg down to the UAE property market before residential prices and rents recover,” the investment bank said.

Although Jones Lang LaSalle, a global real estate consultancy, has refrained from giving any percentage decline, it does believe that the chance of any recovery next year will be dependent upon the rate of economic growth and end user demand for Dubai residential property.

Dubai is expected to see completion of 5,000 units by end-2011, bringing the total residential stock to 331,000 units while an estimated 27,000 units completion next year, it said.

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