The UAE is unlikely to see oversupply of housing units and commercial space in 2016, with rentals softening in the short term, according to JLL, a real estate consultancy.
“A by-product of the slowing market conditions in 2016 is likely to be a continuation of the trend of project delays. This will represent something of a ‘blessing in disguise’ and will help stabilise the market and avoid excessive oversupply,” the consultancy revealed in its ‘2016 Top Trends for UAE Real Estate’.
It attributes project delays to a number of reasons such as financing issues, contractual disputes, construction delays and licensing/approval delays. Besides, some developers may even hold back completions to avoid flooding the market.
“Over the past five years, the materialisation rate of proposed projects has been relatively low, with only 30 per cent of proposed residential projects and 45 per cent of proposed office space completing on schedule.
“The materialisation rate is expected to remain low with further project delays in 2016, which in effect will reduce oversupply risks,” the report said.
Dubai developers are expecting delivery of 26,000 units this year, while the figure stands at 10,000 units in Abu Dhabi.
Craig Plumb, Head of Research at JLL Mena, told Emirates 24|7 that unit completions will be in the range of 12,000 to 18,000 this year.
Despite softening demand across many sectors of the UAE real estate, there remains significant opportunities for those willing to embrace the new trends offered by an increasingly mature and sophisticated market.
“It is also important to recognise that while the pace of economic growth in 2016 is expected to be below that seen in 2013 and 2014; it remains in line with that seen in 2015. The market may be slowing but it is still growing,” he added.
The UAE remains an attractive real estate market and some buyers, especially owner-occupiers and those investors taking a long-term perspective may well see value at current levels.
“Overall, we remain confident that while prices and rentals will soften further in the short term, they are likely to increase again, perhaps as soon as 2017, as the UAE continues on its’ path to becoming a more mature real estate market.”
Emphasis on building safety will become an important matter with various stakeholders, including developers, landlords, occupiers, consultants and government agencies putting greater attention towards building safety.
“Due to increased overall awareness, there will more demand for well-maintained buildings with better fire safety and other systems. The market will also witness new regulations where building owners will have to adhere to stricter fire safety guidelines from government agencies such as Civil Defence,” the report said.
The important need this year is probably less for new regulations, but for more effective enforcement of the existing codes and regulations, it added.
Tags: #UAE #Dubai #AbuDhabi #Rent #Tenants #Property #RealEstate