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Squarefoot eMagazine 245

Oversea Investment Royal Ascent After its share of challenges the UAE appears ready to take its place at the investment table once again The United Arab Emirates finds itself at something of a crossroads. Following six years of record growth, a miserable 2009 started with price drops between 25 and 35 percent, speculators (40 percent of whom were Asian buyers) abandoning the country in the wake of the GFC, and high profile mega-projects (Dubai Exhibition City, Al Burj Tower, Palm Deira, Jumeirah Gardens City) either cancelled or put on hold according to HSBC. While nothing is perfect, things are looking better in 2016. In Dubai, office rents were up in 2016’s first quarter (Q-o-Q), but residential rents are down 3 percent. Sales prices are down too: 2 percent. Thought the IMF downgraded Dubai’s ’16 growth forecast to 2.4 percent, the UAE’s focus on diversifying its economy is in full swing. For now, however, “There are growing signs that the Emirate is facing | Text : Elizabeth Kerr | Photo : www.istockphoto.com | increasing headwinds as a result of global economic challenges, including declining trade volumes with some key partners, due in part to the ongoing US dollar strength,” said CBRE’s first quarter Marketview for 2016. Nonetheless, CBRE predicts further declines for the residential sector due to weakening economic fundamentals and increasing supply. Corporate demand for Grade A office space will remain strong on limited supply and consolidations. JLL has a slightly different view for the capital at Abu Dhabi, seeing a near reversal in both sectors. Its first quarter Market Overview noted that both residential rents and prices are stable despite demand and volumes dipping in the first part of 2016, though that could change later in the year. On the office front, however, “The … market has been the most affected by the decline in government spending and resulting job cuts.” That said, limited supply of premium space has kept Grade A rents stable, “While average Grade B office rents witnessed a slight decline this quarter.” JLL is also quick to point out the impact of new property laws, introduced at the end of 2015, will eventually be felt. Among the regulations is a new Regulatory Authority and rules for off-plan sales, escrow accounts, mortgages and property registration as a start, designed to create a better regulated market with greater transparency and consumer protections. All of which will tighten supply growth. “While this will help reduce over-supply in the current period of weaker demand, it is important that the market does not become overly regulated,” stated JLL. “Healthy levels of future supply are required to keep rents and prices competitive, provide choice to investors and drive demand growth.” 28


Squarefoot eMagazine 245
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