The upheavals of the global financial markets and the ensuing global recession have severely and adversely affected the UAE, and particularly Dubai with its high level of speculative real estate investment and lack of oil revenues. Even before the credit crunch took hold in Q308 and Q408, we were expressing concerns that a downward correction was likely. The same was true for the rental market, which had made significant gains in the past year. Those predictions have been greatly amplified by the economic downturn and continue to be felt in all sectors of the market. However, from about June 2009 sentiment appeared to be tentatively improving with the most bullish commentators suggesting some stabilisation was possible in H209 and 2010. We remain extremely cautious about these forecasts, however, given the magnitude of the market declines and comments by less optimistic analysts, including Standard Chartered Bank, which suggests prices may 'never' return to 2008 levels. In reality, something between these two positions is likely, but any recovery is unlikely before 2010 at the earliest. According to UBS, housing sector prices in Dubai will have fallen another 40% by the end of 2010, when one in three homes will be vacant. Analysts currently estimate a vacancy rate in Dubai of 10-20%. Adding a planned 30,000 new units to the market by the end of 2010 would translate into another 10% rise in vacancies, UBS says. Colliers said in April it believes 64,800 new homes will be ready by the end of 2011, down from an earlier estimate of 140,000 units, and UBS believes Dubai residential property will bottom out at around AED500-800 per square foot, which would be around 40% below current levels. One of the biggest factors affecting residential is the exodus of the expatriate population, which is expected to fall by 8% this year and a further 2% next year. Prices remain high, with CB Richard Ellis (CBRE) ranking Dubai the world's seventh most expensive office market ahead of London, Paris, Singapore and New York. Nevertheless, office prices in Dubai and Abu Dhabi showed a 4% gain in April compared with the previous month, followed by a 5% rise in May, in an HSBC transaction survey. Investment funds focusing on distressed property are forming in the UAE, helping to solve some of the problems caused by disputes between developers and investors that have hit office tower builders' cash flows. Andrew Charlesworth, the head of corporate finance advisory at Jones Lang LaSalle in Dubai, said that the arrival of distressed asset funds could be a signal that the market is in the final part of its decline.
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Partial Table of Contents:
Executive Summary
- Key Features Of This Report
- SWOT Analysis
- United Arab Emirates Real Estate Industry SWOT
- United Arab Emirates Economic SWOT
- United Arab Emirates Business Environment SWOT
- UAE Real Estate Market Overview
- Dubai
- Abu Dhabi
- Ajman
- Ras Al Khaimah
- Latest News
- Key Projects
- Construction Overview
- New And Ongoing Projects
- Residential Construction
- Commercial Construction
Table: United Arab Emirates - Major Infrastructure Projects - Construction
- Real Estate Investment Trusts
Table: FTSE EPRA/NAREIT Global Real Estate Indices Total Returns (%, US dollar terms)
Table: US REITs - Total Returns (%, US dollar terms)
- Industry Finance Outlook
- Global Outlook
Table: Loan Growth, 2006-2013 (% change y-o-y)
Table: Loan-To-Deposit Ratios, 2006-2013
- UAE Monetary Policy
Table: United Arab Emirates - Monetary Policy, 2005-2013
- Industry Forecast Scenario
- Middle East and Africa Real Estate Forecasts
Table: Middle East And South Africa - Housing Prices At A Glance (% change y-o-y)
Table: Office Rents In The Middle East And South Africa, CBRE
Table: Office Rents In The Middle East And South Africa, Other Research
- Singapore Real Estate Forecast
- Construction
Table: UAE Economic And Construction Data, 2008-2018
- UAE Macroeconomic Outlook
Table: United Arab Emirates - Economic Activity
- Business Environment
- Real Estate/Construction Business Environment Rating
Table: Middle East And Africa Real Estate/Construction Business Environment Ratings
- The UAE’s RECBER
- Middle East Project Finance Ratings
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
- UAE Business Environment
Table: BMI Business And Operational Risk Ratings
- Institutions
Table: BMI Legal Framework Ratings
- Infrastructure
- Market Outlook
Table: Middle East And Africa Annual FDI Inflows
Table: BMI Trade Ratings
Table: Top Export Destinations
- Operational Risk
- Company Monitor
- Al Habtoor Leighton Group
- Dutco Balfour Beatty
- Emaar
- Nakheel
- Mubadala Development
- Damac Properties
- Aldar Properties
- Sorouh
- Deyaar Properties
- BMI Methodology
- How We Generate Our Industry Forecasts
- Construction Industry
- Bank Lending
- Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Full ToC is available at:
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