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UAE Freezones Biz News Updates
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UAE property market begins slow recovery
Total value of land transactions in Dubai grew 21 per cent to Dh63 billion
in the first half of the year
Towers along Shaikh Zayed Road. Signs of improved investor confidence have
flowed into the real estate sector, with continued demand for quality, well
located and income producing assets.
The UAE’s real estate market is showing signs of recovery – nearly four
years after the sector faced the fallout of the worst economic crisis in
September 2008 that nearly halted most of the development activities.
Backed by a structured cash injection, careful re-engineering of major
development companies and rescheduling of projects and debts, the sector is
expected to rebound – although slowly, according to market experts.
“The overall residential market is seeing a positive trend with the villa
market continuing to outperform the apartment sector in the second quarter
of 2012,” real estate consultant, Jones Lang LaSalle (JLL), said in a recent
report.
Signs of improved investor confidence have flowed into the real estate
sector, with continued demand for quality, well located and income producing
assets, it said.
“Prime residential buildings in well established locations continue to see
improved performance, but secondary locations are still suffering from
rental and pricing declines,” the report stated.
Except for RAK Properties, all the publicly listed property developers have
recorded solid growth during the second quarter of this year. Emaar
Properties recorded a 45 per cent jump in net profits to Dh1.2 billion at a
time when its revenue remained flat, while Abu Dhabi’s biggest developer,
Aldar Properties, recorded a 228 per cent jump in net profits in the second
quarter of the year – visibly recovering from the near bankrupt situation
when it had to be bailed out by the Abu Dhabi government last year.
Sorouh Real Estate, meanwhile, recorded Dh259 million profit – a 29 per cent
increase over the same period a year earlier, while its revenue jumped 247
per cent to Dh1.2 billion.
“Dubai’s real estate recovery appears to have continued in Q2,” according to
a report by Emirates NBD Research.
And prices for almost all categories of housing rose April through June
according to data from Cluttons. “Mid-range villa prices rose 18.5 per cent
year-on-year last month, outpacing the 14.6 per cent year-on-year rise in
high-end villa prices. Apartment prices rose more modestly, while price
declines in the beleaguered low-end apartment sector have slowed,” the data
revealed.
Total value of land transactions in Dubai grew 21 per cent to Dh63 billion
in the first half of 2012, according to the Dubai Land Department. The
department’s statistics reveal that a total of 18,953 transactions were
recorded in the first half of the year, consisting mostly of sales,
mortgages, land development, lease contracts and grants.
Sultan Bin Mejrin, director-general of Dubai Land Department, said these are
important indicators of growth and strong performance of the market.
“The real estate market in the UAE is quite fragmented with Dubai already
seeing greater stability and even growth in some cases for certain
sub-sectors of the market. This trend is expected to continue for the
remainder of the year,” Matthew Green, Head of Research and Consultancy, CB
Richard Ellis (CBRE), Middle East, told Gulf News.
Echoing similar thoughts is Niall McLoughlin, Senior Vice President of Damac
Properties. “Confidence is coming back to the Dubai market and investors are
looking to capitalise on some great offers. We are set to see an increase in
valuations throughout the rest of the year and into 2013,” he said.
Deflationary pressures are likely to persist during the second half of 2012
as new supply continues to outpace growth in demand and heightened
competition aggravates already falling rents, CB Richard Ellis said in its
latest report.
“On the flip side those situation in less desirable locations will continue
to face challenges in maintaining occupancy rates and in attracting new
tenants. For Abu Dhabi the development cycle is significantly behind Dubai,
with the capital only now reaching the peak of its development cycle,” said
CBRE’s Green. “As new supply emerges we expect to see further deflation of
sales and leasing rates, although this will be moderate as compared to the
declines that we have seen during 2009 and 2010, at the peak of the market
downturn.”
According to a recent report, Dubai remains in the top performing 15 cities
in global real estate sector and number one in the Middle East throughout
the second quarter with buoyant Asian markets and resurgence in the main
European capitals providing a stimulus for growth.
UAE property sector second quarter analysis
- Corporate profitability of real estate companies in second quarter
- Name of developer Net Profit Growth(%) Revenue Growth(%)
- Emaar Properties Dh1.22 billion 45 Dh3.92 billion 0 (Flat)
- Aldar Properties Dh417.9 million 228 Dh4.63 billion 497
- Sorouh Real Estate Dh259.4 million 29 Dh1.2 billion 247
- Union Properties Dh83.6 million 272.21 Dh1 billion (1H) (N/A)
- Deyaar Properties Dh18.6 million 97.87 Dh143 million (N/A)
- RAK Properties Dh23 million -30.5 Dh255.2 million 331.08
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Courtesy Al Nisr Publishing LLC
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