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News Release

Abu Dhabi

Abu Dhabi to be the strongest performing MENA real estate market over the next 2 Years

According to 200 of the region’s premier investor respondents to JLL MENA’s Second Investor Sentiment Survey, in association with Cityscape Intelligence.


  • ​Leadership, planning and superior planned infrastructure makes Abu Dhabi the stand out market for investors;
  • Focus on Fundaments – Investors are refocusing their investment on around real estate fundaments and longer term investment horizons;
  • 2010 set to be the “Vintage Year” in the current cycle, says JLL MENA.

Abu Dhabi will be the stand out market for real estate investors, according to findings from the second annual Investor Sentiment Survey, an in depth study of real estate professionals market views conducted by JLL MENA in association with Cityscape. The report also reveals that, increasingly, investors are returning to invest in fundamentals with more weight being attached to regulatory issues and market risks than six months ago. Further, according to investors surveyed, markets will begin to recover in 12-18 months a view consistent with JLL MENA’s MENA House View that 2010, will be the ‘Vintage’ or optimal year to have invested in.
      
JLL MENA’s Investor Sentiment Survey, incorporates the views of over 200 developers, sovereign wealth funds and high net worth investors, and provides an ideal benchmark for the state of regional real estate markets.

Ian Ohan, Head of MENA Investment Transactions at JLL MENA, commented:

“Sentiment, be it positive or negative, drives markets. Since we last undertook our Investor Sentiment Survey in September 2008 in the aftermath of the Lehman Brothers collapse, sentiment has, without doubt, fuelled a dramatic change in the health of the MENA real estate sector. This is, therefore, a vital piece of research with contributions from the many of the region’s leading investors.

We, as one of the world’s leading real estate advisory organisations see many positives in the report. That investors are returning to investment fundamentals such as focussing on yield is a welcome finding as is the suggestion that there is, at last, an end in sight to the current turmoil. With Abu Dhabi and Saudi Arabia suggested as the hot spots for investors in the coming years, the MENA region looks set to grow in significance even further. As the signposts of recovery begin to emerge globally and regionally, experienced investors that understand the significant lead time to properly review and complete transactions are keen to not miss out on these value investment opportunities and are already pursuing deals.”

Andrew Charlesworth, Head of Corporate Finance Advisory JLL MENA​, commented “the rebuilding of investor confidence is critical to institutional and fund based real estate investment. We are beginning to see the return of investor interest in discretionary funds that provide sound investment strategies, professional and credible management and proprietary deal flow.”

Key findings of the report include:

Middle East was the last region to experience the global downturn

  • Capital values and rentals in the Middle East only started to decline in the final quarter of 2008 whilst other markets in the world had already been in decline for some time. 
  • Middle East real estate markets have reacted relatively quickly over the past 6 months, with prices adjusting to the new market realities.
  • Governments across the Middle East region have been swift to react, compared to their counterparts in more mature economies.
  • Concerted efforts are being made to stabilise the regional financial and real estate markets after the initial damage assessment.

Middle Eastern real estate markets continue to outperform globally

  • Investors view that the Middle East will outperform real estate markets in other regions over the next two years. 36% of respondents consider that the Middle East will have the world’s best performing markets over the next 12-24 months.
  • Investor’s opinions on regional markets confirm view that there is a shifting focus of sovereign wealth funds and major regional investors into their local markets.
  • Asia Pacific, North America and Western Europe seen as showing great potential, with London top of the list of those looking internationally.

Abu Dhabi, Saudi Arabia and Qatar seen as best markets within MENA

  • Abu Dhabi is seen as the market likely to perform the best over the next 12-24 months. A balanced growth story to date, vast oil wealth and a relative undersupply of housing and other asset classes makes the emirate the most attractive investment environment of all the major markets in the region.
  • Saudi Arabia was considered by a quarter of respondents as being the strongest performing market in the next one to two years. Jeddah and Riyadh offer the most potential according to the survey with the new economic cities starting to hit the market towards the end of the year. Vast under-supply of housing, notably in the middle income sector will continue to drive demand in the largest of the Gulf economies.
  • Qatar’s potential was also noted by respondents with almost twice as many as last year suggesting it would outperform other markets. Strong GDP forecasts and vast per capita wealth make Qatar the most protected from a protracted global downturn. Significant future supply may however temper real estate performance in the new term.

Downturn likely to continue in 2009, stage will be set for recovery set in 2010

  • All MENA markets are currently in the downturn stage of their cycle, with Saudi Arabia, least affected, according to respondents.
  • Dubai will be the market hardest hit and is, thus, the furthest market from recovery. Dubai has been hit by a combination of the international downturn as well as a significant level of new supply coming on to the market. With significant adjustments in capital and rental values already in place, during the next 12 to 24 months, Dubai may prove to be one of the most lucrative real estate investment opportunities in the region. Other markets not developing at this pace and able to learn from the Dubai model are thus better protected. 
  • Nevertheless, there is a relatively narrow band of sentiment of the likely recovery time for markets within MENA. Half of those surveyed believe KSA will start its recovery within 12 months time.
  • Liquidity will return to the market in the next 12 months according to 36% of respondents, with a similar number suggesting that this will happen in the next 12-18 months. This supports the view of a broad recovery in 2011.

Falling prices create greatest opportunity

  • 2009 will see a further erosion of values in all markets least in KSA, with Dubai the worst hit.
  • This price adjustment is expected to aid Dubai considerably as investors are attracted back at fairer values and with greater yields. Early signs of such activity is already visible
  • Yield expectations have increased everywhere with investors expecting yields greater circ 11%, higher than the ‘9%’ figure revealed in last year’s survey. This yield shift represents a decrease in expected capital values for income assets of around 20% by respondents and 40% from peak actual traded values, consistent with London and other major centres that entered the downturn at least 12 months prior to MENA.