Sales volume in Dubai's commercial property market more than doubled in 2008 compared to 2007, despite the global market witnessing sharp decline in activity, says a new report.
According to Real Capital Analytics (RCA), Dubai's commercial property jumped 148 per cent to $3.12 billion (Dh11.45bn) last year, with Saint Petersburg in Russia witnessing an increase of 60 per cent to $1.98bn.
There were only five other markets with volume of more than $1bn, none of which are in the top tier of world capitals, had a net increase in volume for the year. Eight of the biggest gainers were in emerging markets, including five in Asia. China topped its three biggest gainers with four top losers.
The US, which had no big gainers, had three major losers, led by condo-saturated Las Vegas at number six, which had a downdraft of 87 per cent. Three markets, topped by Hanover, Germany, had a volume decline of more than 90 per cent; the remaining losses were clustered between 89 per cent and 85 per cent. Number two and four were Chinese cities, and Sydney, reflecting Australia's 2008 setback, was in fifth place, the report said.
With the typical spate of year-end deals, some would have expected the rate of decline in commercial property sales volume to slow in the final quarter of 2008. But the drop accelerated in the developing world, with activity plummeting as the year drew to a close.
While the full-year figures for 2008 were dismal against 2007 sales volume, total investment plunged 57 per cent year-on-year (yoy) to $382.7bn from $880bn – the fourth quarter told an even grimmer story. Global sales for the final three months of 2008 were a full 75 per cent below fourth quarter 2007 totals. According to RCA, all figures are preliminary and final numbers will be presented in February.
Eastern Europe's 50 per cent decline was the least weak of any region in the fourth quarter, and its seven yoy decline on $27.5bn in sales was the second smallest for any region with more than $5bn in sales. Still, this emerging market region showed one of the greatest contrast – 43 percentage points – ≠between its full-year decline and its fourth-quarter drop off, indicating just how rapidly interest in emerging markets is cooling.
The widest gap, 76 percentage points, was in emerging Latin America on $12.1bn in sales. Emerging nations such as India, with $6.1bon in 2008 sales, had a 50-point disparity between its full-year and fourth-quarter declines. But developed markets also showed severe late-2008 stress in sales.
Japan's volume, down 23 per cent for the year, fell 80 per cent in fourth quarter of 2008 against the same period last year, a 57-point gap on $32.7bn in sales.
The Americas fell the hardest in full-year and fourth-quarter sales. The global leader in 2007, the Americas, with 2008 sales of $151bn, was barely ahead of Asia Pacific, with $135.6bon, and well below Europe, Middle East and Africa (Emea), with nearly $210bn. But while sales fell 48 per cent in Emea and 45 per cent in Asia Pacific, they plunged 73 per cent in the Americas for the year after being dragged down 88 per cent in fourth quarter against same period in 2007.
Although the Mideast posted a positive yoy change in sales, it was on just $5bn in volume. And as fourth quarter sales – down 62 per cent over last year – show, even this wealthy region has begun to crack, the report said. The low global volume induced surprisingly little turmoil in annual rankings of the most active markets, with seven of the top 10 remaining on that list.
Still, only 76 markets worldwide in 2008 had more than $1bn in sales volume, down from 135 markets in 2007. Sales for the top 10 markets declined 62 per cent in aggregate yoy. Two of the three new arrivals, Beijing and Hong Kong, which each moved up seven places to number four and eight, were from Asia Pacific.
Two other Asia-Pacific markets, Tokyo and Singapore, each moved up three spots to number three and six. Emea's Stockholm made the biggest move, vaulting an impressive 18 markets to number 10.
While New York Metro and London held firm to the top two spots despite volume declines of 68 per cent and 52 per cent, Paris slipped one spot, LA Metro fell two places to number five, and DC Metro barely clung to the list, dropping from number four to number nine, RCA said.