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As we approach the end of 2012, JLL MENA, the world's leading real estate investment and advisory firm
As we approach the end of 2012, JLL MENA, the world's leading
real estate investment and
advisory firm, provides a summary overview of the UAE’s real estate market over the past year as it prepares to launch its 2013 annual Top Trends Report later in January.Dubai: There are grounds for cautious optimism about the prospects for the Dubai real estate market in 2013 with most sectors of the Dubai market ending the year in the early upturn stage of their cycle. While the real estate sector has lagged the overall economy during 2012, there are now signs that confidence is returning among both investors and developers, particularly in the last six months with a number of major new projects announced. JLL MENA’s recent
Real Estate Investor Sentiment Survey (REISS) confirms that investors remain confident with the city emerging as the clear favourite among major real estate investors across the MENA region. There are indications that some of the lessons of the last real estate crisis have been learned. The most important of these is the need to adopt a long term and co-ordinated approach, rather than developing too much real estate too quickly. Providing this increase in confidence does not result in negative over exuberance, it is likely that most sectors will continue to experience some growth in prices and rentals in 2013.
Abu Dhabi: In 2012, the Executive Council announced a major spending programme, re–prioritising investment into capital projects that have the greatest strategic impact on the Emirate. The Government is strategically targeting distinct market sectors and phasing these projects over a longer time frame. Abu Dhabi has become more cost competitive, its urban infrastructure and quality of life offering continues to improve through better quality accommodation and on-going improvements to social infrastructure and amenities and additional moves to channel demand to Abu Dhabi Emirate generally in line with its 2030 Vision. However demand remains suppressed in the short term. Whilst supply continues to increase as major projects reach completion, vacancy rates are set to rise further and consequently rental values have continued to decline throughout 2012. Additional job growth is required to drive demand and absorb vacant supply and the prospects for 2013 therefore remain contingent on major government spending, The prospects for Abu Dhabi in the medium term are however very strong: the Government remains committed to Vision 2030 and its policy agenda; domestic capital will continue to dominate the market and there are sufficient wealth reserves to deliver major projects.
Commenting on 2012,
Alan Robertson, CEO of
JLL MENA, said:
“In 2012 the UAE real estate market has been a tale of two very different cities. We have seen cautious optimism returning to the Dubai market. The recovery has however been very selective and focused on only the best quality projects, locations and developers. While 2013 is likely to see a broader based recovery, the strongest performance will remain concentrated on those projects for which there is confirmed investment and tenant demand. The significant levels of vacancy and further new supply will limit the extent to which poorer quality projects and those in secondary locations will benefit.”
“Abu Dhabi lags further behind in its recovery. The Government remains committed to a broad range of capital projects and infrastructure developments, but demand remains weak pending the return of major government capital spending whilst supply continues to drive the Emirate’s vacancy levels. Until we see more take-up of available space, rents will continue to suffer. However, as with Dubai, there are examples of where good quality space that is meeting expectations, has attracted quality occupiers and where rents have stabilised.”
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