Abu Dhabi: The real estate markets in both Abu Dhabi and Dubai have witnessed improvements in performance, a report by Jones Lang LaSalle (JLL) shows.
The report, published on Monday, predicts selective growth for Dubai’s real estate sector as rents and values continue to improve for prime properties in the hotel, retail and residential segments.
It also reveals that despite demand for high quality retail space, the Abu Dhabi market remain tenant-favourable, with rents yet to bottom out.
“Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market, but we are continuing to move away from one holistic model. As the market continues to mature, we will see more divergence,” Alan Robertson, CEO of JLL, Middle East and North Africa, was quoted as saying.
“Well managed, high-quality assets in prime locations will continue to perform whilst those in secondary locations will need to be ever more creative to attract and retain tenants, who now have ever more choice and are moving with their feet to source and find the best deals available,” he added.
“Dubai is generally ahead of the curve as rents are finally starting to pick up whilst indicators suggest Abu Dhabi has yet to bottom out. In terms of sectors, retail remains a driving force with significant opportunities in both emirates,” Robertson said.
“On the investment and development fronts, we expect to see more major deals announced in the weeks and months ahead, reflecting the improved economic climate. However, we also expect the market to move away from a construction-led environment to one more focused on asset management as owners look to safeguard their investment and drive rental growth.”
The report shows that the real estate investment market has been quiet over the summer months, with no major open market commercial transactions reported in this period.
Abu Dhabi’s residential market continued to see declines in both sale prices and rents.
Since the market peak in 2008, the average prime rent for a two-bedroom apartment in Abu Dhabi has fallen in excess of 48 per cent, the report shows.
Craig Plumb, head of research of JLL in Mena, said: “While the Dubai market is certainly starting to recover, this improvement remains largely focused on a limited number of high-quality assets and locations, and has yet to trickle down to the overall market where rents and values have remained largely unchanged during 2012.
“The overall market still faces challenges of high new supply and limited demand for secondary assets, that is providing tenants and occupiers with significant choices.”
Philippo Rean, director of MIPIM and MIPIM Asia, told Gulf News: “The UAE market is improving nowadays and it is lucrative for foreign investors to invest in real estate, away from the slowdown that is being witnessed in other parts of the world. Real estate in the UAE is promising and it is now on the ramp-up state after a state of stability throughout the last few months.”
Praveen Kumar, director of the Strategic Sales Group, told Gulf News: “The UAE market is a regional hub and it has passed the most difficult phase with success. The market has stabilised and it is not upsurging.”
He called on developers to coordinate their efforts to complete suspended projects, adding no government bailout was required for developers to proceed further with their projects.