Global financial crisis also hit economy of United Arab Emirates like other countries across the globe. Especially Dubai was badly suffered as it is the major business and financial hub of UAE. Real estate has always been a major business sector across UAE and Dubai because major investment companies have made huge investments in real estate property development and construction projects to execute residential, commercial and industrial needs of locals and expats, national and foreign entrepreneurs. During the recession number of people became unemployed and several expats went back to their country, such circumstances resulted in oversupply of properties. When market is oversupplied only few buyers are present in the market. Due to global economic recession, residential property prices were fallen down to more than 60% in the emirate.
According to a recent report Dubai real estate market started showing slow recovery from fourth quarter of year 2011 and started regaining its momentum. At initial stage of recovery, property market showed stability in property prices and rents. Asset market has regained its previous progressing trend in the start of 2012 and started showing considerable rise in property prices and rents in prime location of the emirate. According to expert’s analysis, real estate market of Abu Dhabi was less affected at the time of global economic recession, when Dubai property market was facing bad times during 2008. Due to its late entry in recession phase the capital emirate is still facing challenges and property prices and rents for residential units will continue to slump down to 3% and 1% respectively. It is expected that asset market of the capital emirate will receive a huge supply of high end residential units this year. This will be a huge challenge for asset market of the capital city. That’s why the emirate will remain a tenant friendly market for most of the property types. Dubai has already faced this situation and recently it has started showing vigorous progress in real estate property sectors. Real estate market in UAE can be divided in sectors like retail, commercial, industrial and residential.
In a recent report published in Emirates 24/7, experts Alan Robertson, CEO of Jones Lang LaSalle, Middle East & North Africa stated that market response is improving in both the emirates as they are operating the real estate market in the region. Although Dubai property market matures and starting to recover, you can clearly observe that the progress will remain limited to high end properties located in prime locations of the emirate. Such super luxury properties become famous among most of the buyers, investors and tenants, whereas assets located in other secondary locations will have to spend more to attract buyers and retain their tenants. Moreover, property rents also remain unchanged and doesn’t show any rise during 2012. He further suggested that market should change its focus from construction-led environment to satisfactory asset management as property owners and investors are now willing to safeguard their investments rather investing in more projects. They prefer to rent their properties to earn money in form of property rent.
According to a recent circular issued by State government of Abu Dhabi, all public sector employees of the capital emirate who are living in other areas are required to relocate in the emirate. UAE Government clearly stated that the residents will essentially need to follow this regulation form late 2013. It has expected that this step will surely boost up the property demand in capital emirate. This will also strengthen status of landlords and positively stabilize the rental market in the emirate.
Moreover, in a year-on-year to August comparison report property prices in emirate of Dubai is increased to 14% whereas villa sales will be expected to rise 23%. And residential rents will rise 7 % year-on-year in August. Furthermore, the retail sector of both the emirates started showing recovery. It is also expected that total 200,000 square meter gross leasable land area will also be available in Abu Dhabi by mid of 2013. There is a significant demand for retail space has observed in the emirate of Abu Dhabi, as the local residents are now capable to spend more. Additionally with improved travel and tourism in the region also increases the demand of retail facilities. Developers are working on several new projects to meet the needs of residents and tourists.
On the other hand if you observe retail market of Dubai, you will see retail sector is developing two-tier market. Retail sector has two types of malls popular and less popular malls. The subsequent type of mall is less in demand among consumers. Mall owners are now considering new marketing techniques to become famous among consumers. If you consider real estate market of UAE, you will see the whole market is still facing challenges, due to fresh supply of assets. This has made the market tenant friendly as tenants can avail good choices.