Dubai property on growth path

Dubai: Dubai's property market appears to be returning to a growth path, after having 'bottomed out', major real estate players and market analysts believe.

"As the asset values are becoming attractive, there is a renewed interest among overseas investors in Dubai's properties," Peter Riddoch, chief executive of Damac Properties, told Gulf News.

"The market is showing early signs of bottoming out. However, it is too early to be absolutely sure."

Dubai's property market, the main driver of the Emirate's economic growth for over five years, faced a sharp decline last year due to a sudden outflow of a large pool of cash that nearly eliminated the speculators from the market.

One tangible sign of a marked return of investor confidence in the region is the number and success of recent bond issues, both by corporates and sovereigns, Standard Chartered Bank said in its latest report.

"Indeed, only a few weeks back, it would have been difficult to imagine that so much debt could be absorbed by the markets. Dubai in particular saw its credit default swap (CDS) spreads widen to around the 1,000 basis points (bps) mark in February," the report said.

This has allowed market players to tap the bond market at levels that were unthinkable until recently. In April, Abu Dhabi issued $3 billion (Dh11 billion) of bonds with a 4-per cent coupon on the 5-year tenor, and the subscription was a huge success.

According to the HSBC, agreed prices in Dubai's real estate market went up 4 per cent in April and 5 per cent in May.

"The end of the freefall is encouraging for Dubai [a similar pattern has been observed in Abu Dhabi], as it had a direct negative impact on the banking sector via higher defaults and non-performing loans," the report said.

"After a fall of 30-40 per cent [depending on the indictor chosen], the first signs of stabilisation in Dubai's real-estate sector have appeared, taking observers by surprise since further declines were expected. Some caution is warranted, as there are still question marks surrounding population flows in the coming months," it said.

"There is a slight increase in sales volume. Over the last two months, we have managed to push the stocks for those properties getting ready," Abid Junaid, executive director of ETA-Star Properties, told Gulf News on Tuesday.

"The market is definitely bottoming out and slowly moving towards the growth path. However, before the summer lull sets in, we expect some more sales to happen this month."