Unmistakable signs of local and global banks re-entering the mortgage lending market suggest that the UAE's real estate market is regaining the confidence of the financial sector, and some analysts believe that now may be the time for long-term investors to re-enter the market.
"We do see confidence coming back," James Gauduchon, Manager-Corporate Marketing, Better Homes, a real estate company, told Emirates Business.
"It is possible that the [property] market has started heading upward again," said Mohammed Amiri, Head of Retail, Dubai Bank
"The classic pattern of any property market is a slow upward start, then a period of manic buying followed by a slowdown and standstill. Then the market changes direction and prices begin to head downwards, at first slowly and then with a collapse to a new market bottom from which the next up-cycle can begin," said Amiri, suggesting that the market is poised to move up now.
"As lending eases and the housing environment in the UAE offers customers attractive prices, we will see more end-users taking up the opportunity to own a home," said Abdulfattah Sharaf, Chief Executive Officer of Personal Financial Services, HSBC Middle East and North Africa.
"After a fall of 30-40 per cent (depending on the indictor chosen), the first signs of stabilisation in Dubai's real estate sector have appeared, taking observers by surprise since further declines were expected," Philippe Dauba-Pantanacce, Senior Economist, Standard Chartered Bank, wrote in a report.
"The amount of distressed stock on the market has gradually diminished," the report said. "The end of the freefall is encouraging for Dubai (a similar pattern has been observed in Abu Dhabi), as it had a direct negative impact on the banking sector via higher defaults and NPLs [non-performing loans]."
"The residential segment will be the first to recover," reckons Gauduchon, adding that commercial and retail real estate will follow residential's lead on the upswing.
However, analysts advise caution as a further decline, especially in some segments of the market, cannot be ruled out. Gauduchon said completed properties that "are not in the desert" will fetch better prices going forward while off-plan projects or those in obscure locations may never see the returns investors first expected.
While Emirates NBD, the region's largest bank in terms of assets, would not comment on trends in the property sector, Suvo Sarkar, the bank's Executive Vice-President and General Manager - Retail Banking, told this newspaper that "competitively priced, high quality and completed properties in prime locations will continue to have more demand and value than others".
"Traditional real estate – near the sea or in the middle of the town – will always be worth more in the long term," he said. "The next couple of years offer the best investment opportunity to long-term players."
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