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Discuss this article (22 Comments)Investors fear UAE property market has yet to hit bottom
by This email address is being protected from spam bots, you need Javascript enabled to view it on Tuesday, 30 June 2009
MARKET SENTIMENT: Investors believe the UAE real estate market still has a way to fall, according to a new report out on Tuesday. (Getty Images)
Only 19 percent of investors believe the UAE real estate market has bottomed out despite a jump in investor sentiment, according to Shuaa Capital’s June GCC investor confidence survey.
“Of special interest this month was the question of whether investors were calling a bottom for the real estate sector,” said Oliver Schutzmann, Shuaa’s chief communications officer and author of the report.
A majority of investors in GCC countries have yet to do that, with the exception of Saudi Arabia, where 37.1 percent of respondents have called the bottom, 28.1 percent are undecided and 19.1 percent are still negative on the real estate sector.
The remaining respondents did not have an opinion on Saudi real estate.
In the UAE, 34.8 percent were negative, 27.0 percent were undecided and only 19.1 percent said they thought real estate prices had hit bottom.
Qatar was the only other market where real estate has “almost” seen the worst, Schutzmann said, with 27.0 percent of investors having called the bottom, while 30.3 percent were undecided and 28.1 percent were negative.
Shuaa’s Gulf-wide investor confidence index, which is the only one of its kind in the region, jumped 14.1 points to 133.5 in June, boosted by the UAE, where sentiment swung to positive from negative.
A number greater than 100 represents positive sentiment.
The UAE index witnessed the highest increase in investor confidence, rising 16.8 points to 123.8 points on the month, while Qatar posted the highest score at 141.6 points, followed by Saudi Arabia, which was unchanged at 139.9 points.
The Oman measure rose by 13.1 points and now stands at 117.7 points.
Both Bahrain, up to 109.8 points from 96.8, and Kuwait, up to 103.1 points from 87.3, are now in positive territory.
The survey was conducted between June 13 and 16.
Ninety institutional investors responded to questions about current and future economic conditions, stock markets, sectors, currencies and commodities.
READERS' COMMENTS
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Rent increase
Posted by Dod, Dubai on Sunday 5 July 2009 at 10:31 UAE time
I don't feel particularly grateful Paul:
Just before completion of my first year they sent a circular to all tenants without any regard for the rent cap to say that all rents would be increased by 50%, causing a lot of stress for tenants. Some took them to the rent committee, I sat down with them and agreed a 13% increase. So I went higher than I needed to go in good faith because I conceded that rents were increasing.
These properties are 30 years old. and they are getting double the rent they received jsut 3 years ago.
The RERA index is a joke. MY landlord is renting to new tenants at 20% below the lower band amount that RERA quotes for our units, so the Landlord knows the benchmarks are BS but still quotes them and uses them as a base.
My rent is 15% what they are renting out empty units to newcomers. I am not far off what I can find elsewhere except for agents fees and moving hassle, and stress for my family
I know units nearby (my old villa) where they jacked up prices from 60K to 170K!!! overnight after splashing some rubbish quality paint on. Yes they filled the places for a few months, now 50% empty. After the crash they reduced them to 150K. I called them last week and a very worried sounding agent said now 120K.
Serves them right for being greedy. They caused the tenants a load of hassle, cost, stress, and at the end of the day they have gaps in their rentals and they are no better off.
No gratitude from them for having consistent trustworthy tenants
Posted by Dod, Dubai on Sunday 5 July 2009 at 10:31 UAE time
I don't feel particularly grateful Paul:
Just before completion of my first year they sent a circular to all tenants without any regard for the rent cap to say that all rents would be increased by 50%, causing a lot of stress for tenants. Some took them to the rent committee, I sat down with them and agreed a 13% increase. So I went higher than I needed to go in good faith because I conceded that rents were increasing.
These properties are 30 years old. and they are getting double the rent they received jsut 3 years ago.
The RERA index is a joke. MY landlord is renting to new tenants at 20% below the lower band amount that RERA quotes for our units, so the Landlord knows the benchmarks are BS but still quotes them and uses them as a base.
My rent is 15% what they are renting out empty units to newcomers. I am not far off what I can find elsewhere except for agents fees and moving hassle, and stress for my family
I know units nearby (my old villa) where they jacked up prices from 60K to 170K!!! overnight after splashing some rubbish quality paint on. Yes they filled the places for a few months, now 50% empty. After the crash they reduced them to 150K. I called them last week and a very worried sounding agent said now 120K.
Serves them right for being greedy. They caused the tenants a load of hassle, cost, stress, and at the end of the day they have gaps in their rentals and they are no better off.
No gratitude from them for having consistent trustworthy tenants
yes
Posted by paul, Dubai, UAE on Friday 3 July 2009 at 12:18 UAE time
Dod, you can move somewhere else if you don't agree with it. Of course the reason that you are complaining and won't move is that even with the 10% increase RERA allows, you are still paying BELOW the market rate (or you'd move).
The only reason your rent is going up and not down is because it was (generously) capped by RERA for years at a fraction of the market rate. But instead of thanking them for giving you a 50% discount for two years you are complaining about the fact that this year your discount on the market rate is only going to be 20% or whatever.
Do you really think you have a right to expect the government to force private landlords to rent something at half of market value to you forever? Are you really too ungrateful to see that the only reason your rent is going up is because it was capped at such a low level by RERA for years?
Posted by paul, Dubai, UAE on Friday 3 July 2009 at 12:18 UAE time
Dod, you can move somewhere else if you don't agree with it. Of course the reason that you are complaining and won't move is that even with the 10% increase RERA allows, you are still paying BELOW the market rate (or you'd move).
The only reason your rent is going up and not down is because it was (generously) capped by RERA for years at a fraction of the market rate. But instead of thanking them for giving you a 50% discount for two years you are complaining about the fact that this year your discount on the market rate is only going to be 20% or whatever.
Do you really think you have a right to expect the government to force private landlords to rent something at half of market value to you forever? Are you really too ungrateful to see that the only reason your rent is going up is because it was capped at such a low level by RERA for years?
Rent increase
Posted by Dod, Dubai on Thursday 2 July 2009 at 15:35 UAE time
I've just been busted by my landlord who wants to increase my rent by 10% because of the provisions with the stupid RERA rent benchmark. Apparently my rent is low enough below the RERA guide to allow him to try this. Ridiculous how the laws change to allow landlords to increase when the market is crashing. Any ideas?
Posted by Dod, Dubai on Thursday 2 July 2009 at 15:35 UAE time
I've just been busted by my landlord who wants to increase my rent by 10% because of the provisions with the stupid RERA rent benchmark. Apparently my rent is low enough below the RERA guide to allow him to try this. Ridiculous how the laws change to allow landlords to increase when the market is crashing. Any ideas?
omar, some answers
Posted by paul, Dubai, UAE on Thursday 2 July 2009 at 11:23 UAE time
Omar, if I might address your points to bearish posters such as myself:
1. Why are you still here?
Well, I was planning on moving my business overseas last year. But then the expected bust came, and to be honest I am loving it. My rent has halved, the roads are emptier and the folks at GSO are much more polite to me when I renew staff visas and so on. My landlord no longer hassles to get me out of the property, on the contrary! Suddenly I am Mr Popular! Why leave now when it's getting cheaper and better for me every day?
2. UAE nationals abroad
I came to the UAE because I have skills that the UAE needs and it does not have among its own citizens. For similar reasons, few UAE nationals end up overseas because there is little demand for the skills they have (or more to the point, don't have). Supply and demand old chap, surely a businessman can understand that?
Posted by paul, Dubai, UAE on Thursday 2 July 2009 at 11:23 UAE time
Omar, if I might address your points to bearish posters such as myself:
1. Why are you still here?
Well, I was planning on moving my business overseas last year. But then the expected bust came, and to be honest I am loving it. My rent has halved, the roads are emptier and the folks at GSO are much more polite to me when I renew staff visas and so on. My landlord no longer hassles to get me out of the property, on the contrary! Suddenly I am Mr Popular! Why leave now when it's getting cheaper and better for me every day?
2. UAE nationals abroad
I came to the UAE because I have skills that the UAE needs and it does not have among its own citizens. For similar reasons, few UAE nationals end up overseas because there is little demand for the skills they have (or more to the point, don't have). Supply and demand old chap, surely a businessman can understand that?
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