United Arab Emirates Real Estate Report Q2 2012
Includes 3 FREE quarterly updates
BMI is below consensus in its forecast that sees the UAE’s real GDP expanding 3.3% in 2011 and averaging 4.1% through to 2016. Nevertheless, the UAE’s status as a safe haven amid the regional turmoil of the Arab spring is actually benefiting the economy: resultant growth and investment in the domestic banking and tourism sectors as a consequence of Bahraini unrest is of particular note. This is good news for the retail and tourism sub-sectors of the UAE real estate market.
However, the commercial market remains plagued by huge amounts of unoccupied property and weak credit conditions. Even with improving economic prospects and expected increased demand, the immense volume of oversupply will continue to depress rentals. New supply was certainly limited in H111, but plenty of projects are still under way.
Underlying figures from CPI Financial show that the value of cancelled and delayed construction projects in the UAE rose 13% month-on-month to US$170bn in August 2011. The country accounted for 56% of the total cancelled or delayed projects in the Middle East and North Africa during the month. These concerning figures no doubt contributed to the Dubai Land Department’s Q311 launch of its Real Estate Development Plan, which is to give a rescue package to 100 projects with financial problems.
The bursting of the UAE’s real estate bubble in 2008 has had largely negative consequences, with the government having to resort to bailouts to shore up the sector, and bondholders facing losses. Certain large prestige projects, such as Dubailand, have stalled, although the sector as a whole is showing signs of recovery, with rental rate growths a sign that high oil revenues are encouraging greater demand. Retail in particular is emerging as a strong growth area. In the long term, those companies that are most likely to flourish are those that move to income-generating assets such as shopping malls and leasing.
BMI is below consensus in its forecast that sees the UAE’s real GDP expanding 3.3% in 2011 and averaging 4.1% through to 2016. Nevertheless, the UAE’s status as a safe haven amid the regional turmoil of the Arab spring is actually benefiting the economy: resultant growth and investment in the domestic banking and tourism sectors as a consequence of Bahraini unrest is of particular note. This is good news for the retail and tourism sub-sectors of the UAE real estate market.
However, the commercial market remains plagued by huge amounts of unoccupied property and weak credit conditions. Even with improving economic prospects and expected increased demand, the immense volume of oversupply will continue to depress rentals. New supply was certainly limited in H111, but plenty of projects are still under way.
Underlying figures from CPI Financial show that the value of cancelled and delayed construction projects in the UAE rose 13% month-on-month to US$170bn in August 2011. The country accounted for 56% of the total cancelled or delayed projects in the Middle East and North Africa during the month. These concerning figures no doubt contributed to the Dubai Land Department’s Q311 launch of its Real Estate Development Plan, which is to give a rescue package to 100 projects with financial problems.
The bursting of the UAE’s real estate bubble in 2008 has had largely negative consequences, with the government having to resort to bailouts to shore up the sector, and bondholders facing losses. Certain large prestige projects, such as Dubailand, have stalled, although the sector as a whole is showing signs of recovery, with rental rate growths a sign that high oil revenues are encouraging greater demand. Retail in particular is emerging as a strong growth area. In the long term, those companies that are most likely to flourish are those that move to income-generating assets such as shopping malls and leasing.
Contents
Executive SummarySWOT Analysis
UAE Real Estate Industry SWOT
UAE Economic SWOT
UAE Business Environment SWOT
Real Estate Market Overview
Real Estate Market Analysis
Office
Table: Historic Rents – 2011-2012 (AED per m2/month)
Table: Terms of Rental Contract/Leases – Mid-2012
Table: Net Yield, 2012-2013
Retail
Table: Historic Rents – 2011-2012 (AED per m2/month)
Table: Terms of Rental Contract/Leases – Mid-2012
Table: Net Yield, 2012-2013
Industrial
Table: Historic Rents – 2011-2012 (AED per m2/month)
Table: Terms of Rental Contracts/Leases – Mid-2012
Table: Net Yield, 2012-2013
Forecast Scenario
Office
Table: Forecast Rents (AED per m2/month)
Table: Forecast Net Yield, 2008-2016
Retail
Table: Forecast Rents (AED per m2/month)
Table: Forecast Net Yield, 2008-2016
Industrial
Table: Forecast Rents (AED per m2/month)
Table: Forecast Net Yield, 2008-2016
Infrastructure Report
Table: UAE Construction And Infrastructure Industry Data, 2007-2016
Table: UAE Construction And Infrastructure Industry Data, 2012-2021
Macroeconomic Outlook
Table: United Arab Emirates – GDP By Expenditure, Current Prices Breakdown
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Middle East and Africa – Business Environment Ratings
The UAE’s Business Environment
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Middle East and Africa – Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Operational Risk
Competitive Landscape
Company Profiles
Aldar Properties PJSC
Al-Habtoor Leighton Group
Damac Properties
Deyaar Development
Dutco Balfour Beatty
Emaar
Mubadala Development
Nakheel
Sorouh
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources Skip to top