Dubai property: Residential market close to bottom
It will be a broader recovery for the Dubai residential market in terms of prices and rentals next year than just some pockets showing signs of stablistation this year, according to Jones Lang LaSalle (JLL).
“Residential market is close to bottom while prices are increasing in certain areas. We will see some recovery by end of the year, but the market sector as a whole will recover next year,” Craig Plumb, Head of Research, Jones Lang LaSalle Mena, said on Sunday.
Abu Dhabi residential market will, however, continue to decline as more supply is released.
“Due to the significant development pipeline, rents will continue to experience downward pressure. This will help decrease the rent premium that Abu Dhabi has maintained over Dubai to date.”
Alan Robertson, CEO, Jones Lang LaSalle MENA said year 2011 was a difficult year for real estate investors with most sectors of the market moving in the favour of tenants, with lower prices and rentals.
“While these trends appear likely to continue into 2012, the main trend for this year is likely to be an increasing polarisation within each sector of the market. As the performance of the best quality projects will improve, average prices are expected to decline further in 2012 within this increasingly two tier market.”
JLL believes the UAE will see an increase in property transactions this year, driven by
private investors and high net worth individuals rather than investment institutions. The majority of whole building sales will be in the residential sector, with a preferred asset price of Dh30 to Dh70 million.
“The UAE real estate market becomes generally more realistic during 2012. Lower prices, more choice of higher quality product and its role as a regional safe haven will increase the attractiveness of the UAE market to both occupiers and investors this year,” Plumb added.
Robertson said that the local real estate market will continue be impacted by regional and global events during 2012 as, the UAE is not immune from the on-going impact of the Arab Spring and the economic troubles of the Eurozone.
“As we enter 2012, the real estate sector will inevitably be susceptible to any potential geo-political changes within the region, with the recent escalation of rhetoric between Iran and the West being the major cause of uncertainty. The worsening European debt crises and its impact on the global economy will be the other major external challenge to the UAE real estate market in 2012,” he added.
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