Dubai: As one of the worst-hit economic sectors during the financial crisis of 2008, the property industry has witnessed some signs of revival in 2012. This year will be remembered for the pick-up in some segments of the market as Dubai continues to hold its ‘safe haven’ status.
Still, there are concerns about the property market that suggest it is still not out of the woods just yet, analysts say.
“Real estate has shown the first solid signs of recovery since 2008, particularly in the Dubai residential market. There has been a good uptake on newly completed stock and prices have strengthened both in sales and rentals but notably in the popular freehold communities such as Emirates Living, Palm Jumeirah, Arabian Ranches and Downtown,” said Helen Tatham, director of residential at Knight Frank.
Positive signs of slow and gradual revival include the success of off-plan sales and releases by major developers such as Emaar and Nakheel, the enforcement of transparency and regulation that continued to improve through 2012 and project handovers such as the Princess Tower in Dubai Marina — the tallest residential building in the world, she said.
“For Dubai, 2012 has been a year of steady recovery and good progress,” said Alan Robertson, chief executive for Mena at Jones Lang LaSalle (JLL), citing the announcement of the Investor Protection Law that is expected to renew confidence in the market.
Re-starting stalled schemes
Major developers are re-starting previously stalled schemes and some are even launching new projects while rents continue to increase for the best quality schemes. “All of this provides clear evidence of the ‘corner being turned’,” he said.
The recently announced multiple entry visa to the UAE will also boost the purchase of freehold property here but they are only valid for six months, which limits the positive benefit, Robertson noted.
Developers are also optimistic about real estate this year.
“The market is stable, trading activity and trust is back and there are better laws and regulations in constant development,” said Khalid Al Malik, group chief executive of Dubai Properties Group, citing sales in Bay Square and 95 per cent occupancy in its leasing portfolio of residential projects.
Emaar Properties has also seen some highs in the market. It sold out its three key projects: high-end apartments at Panorama at The Views, luxury homes in Arabian Ranches and The Address The BLVD serviced residences.
“The overwhelming customer response, with the units released for sale being sold out on the very first day of their public launch, is a clear demonstration of the positive growth of Dubai’s property sector, led by strong economic fundamentals,” an Emaar Properties spokesperson said in an email to Gulf News.
While the Dubai residential segment has seen growth in certain areas, there is still high vacancy rates in the office market that is likely to continue for some time due to the large development pipeline, Robertson said.
“The markets in Abu Dhabi are a year or two behind Dubai in their cycle and will continue to face some challenges in the short term,” he said, adding that there are measures to restrict supply and stimulate demand.
In addition, the move towards establishing Owners’ Associations (OAs) has not been without problems but have witnessed support from Rera (Real Estate Regulatory Agency), said Tatham. “Prompt payment of service fees and owner expectations will take a while to settle, so hopefully we won’t see any more drastic action taken by developers to enforce this.”
Looking forward to the market’s performance next year, analysts and developers say they expect current trends to continue.
“To a large extent we expect more of the same,” said Robertson. “In the residential market, the best locations and projects, along with those developers with a strong reputation, will experience improved activity levels and higher prices, while others will continue to find life quite challenging. We can expect to see a beneficial trickle down effect to some lower and mid-market projects developing as a result of increased prices and activity levels in the best schemes,” he said. “The office markets will remain largely in favour of the occupiers and that should help encourage more activity.”
Improved liquidity, the exit of speculators and the presence of more serious investors will continue the trend of recovery next year, said Al Malik.
Growth will continue to come from the residential sector next year and developers will be “careful” with any new projects, Al Malik added.