Residential property markets in the United Arab Emirates will continue to mature this year, with quality and amenities driving demand, according to a new report from real estate consultants Cluttons.
Cluttons also anticipates an improvement in occupier demand in the commercial sector where rents are expected to bottom out in 2012 with minimal further reductions.
The real estate specialist has had a dedicated Middle Eastern presence since 1976 and believes that there was a general maturing of the marketplace in 2011 and predicts a brisk start to 2012.
It says that there will be a continuation of many of the trends seen in the residential market, with good quality, well established developments benefitting from nearby services and amenities, and continuing to do well at the expense of newer residential areas.
Cluttons also anticipates the residential market continuing to gain from increasingly available mortgage finance options at competitive rates.
In the commercial sector it anticipates an improvement in occupier demand as the year begins with increasing numbers of companies looking to relocate into the UAE. This trend can be attributed to the effects of the Arab Spring, and Dubai’s stability and perception as a business ‘safe haven’, it points out.
‘The general oversupply of office stock in the market place and low rents on offer will also continue to fuel occupier movement within the city. Many companies are still going through fairly rigid cost saving and downsizing exercises, noting that more focus has been put on reducing rents and vacant floor space that is no longer needed,’ its report says.
‘Whilst a general oversupply of office stock will continue to be a feature of the market in 2012, there are signs that rents are beginning to bottom out and further reductions are hoped to be minimal. Rental incentives and flexibility offered by landlords is likely to continue to increase in order to reduce vacancy levels,’ it adds.
However, despite a number of positive signs, Cluttons notes that the overall situation in Europe and the US cannot be ignored, and advises general caution over the potential knock on effects in the region in respect of debt financing and general liquidity levels.