UAE's office market stabilised in Q4, says RICS

The UAE's commercial property market, which has seen prices slump dramatically from their 2008 peaks, has started to stabilise, according to the Royal Institution of Chartered Surveyors (RICS).

In its Q4 2011 Global Commercial Property Survey, RICS said occupier demand in the UAE had "broadly stabilised".

It added that rental expectations and investment enquiries during the final quarter of last year maintained "an upward trend".

Globally, expectations in both the investment and occupier markets have been downgraded in an increasing number of countries, the report said.

Despite this, rent expectations remain positive in eight of the countries surveyed, with Canada, Brazil, Russia and China leading the way.

However, the outlook for rents was still quite negative across much of Europe with the noticeable exception of Germany.

"The prospect of an extended period of minimal growth, if not a retreat back into outright recession, is clearly weighing heavily on the sector in the wake of the ongoing turmoil relating to the sovereign debt crisis," the report said.

"Sentiment in the occupier market has also turned a little more negative in both Singapore and India but that follows strong increases in rents through 2010 and the first half of 2011," it added.

On the investment side, Canada, Brazil, Russia and China were again strongest for expectations for capital values while in much of Europe sentiment was particularly downbeat.

Simon Rubinsohn, RICS chief economist, said: "It is no surprise that the fourth quarter results are a little bit gloomier given the economic news during the period.

"However, the data shows that real estate in some parts of the world continues to provide significant opportunities. In particular, the numbers demonstrate that sentiment remains generally upbeat in many of the faster growing economies even if they are themselves also likely to grow a little more slowly in 2012."

CB Richard Ellis said last month that Dubai's office occupier activity had been buoyant in the third quarter of 2011 with the market seeing a significant upturn in lease enquiries.

By contrast, the CBRE research showed Abu Dhabi's rising vacancy rates are keeping rents firmly under pressure.

Dubai saw current demand increase in Q3 2011 with existing companies either looking to expand their activities, or from occupiers located in older areas of the city seeking more central areas, the real estate consultancy said.

The Dubai International Financial Centre and TECOM freezones were particularly in demand this quarter, resulting in a sharp reduction in local vacancy rates, it added.

In Abu Dhabi many occupiers are considering deferring relocation decisions until 2012, when a considerable amount of new supply will become available to the market, CBRE said.