By Rebecca Bundhun
Global real estate firm says prices and rents will stabilise in 2010, before picking up.
Dubai property prices and rental rates are likely to start recovering in 2011, following a period of stabilisation in 2010, a global real estate firm said on Sunday.
Jones Lang LaSalle sees 2009 as a year of correction for Dubai’s property market amid the global economic downturn, with the emirate likely to be harder hit than other markets in the region due to its greater integration in the global economy.
“The impact of the global economic crisis on real estate markets in the GCC has been both sudden and dramatic,” the firm’s analysts wrote in a research note.
“While other markets across the region are likely to witness a similar shape to their cycle, the timing and magnitude will be somewhat different to that experienced in Dubai.”
The GCC real estate markets have come under increasing pressure as banks across the region stop lending in a bid to reduce their exposure to real estate, while developers are being hit hard by defaulting buyers and a debt market that has dried up.
But, Jones Lang LaSalle said that the downturn also presented significant investment opportunities - picking out the Abu Dhabi commmercial sector, middle income housing in Dubai and Saudi and Qatar as good options.
“Evidence from past corrections in other markets suggests those that act decisively during the downturn are best positioned to benefit from the subsequent recovery phase of the cycle,” the analysts said.
“Among the markets and sectors where we see continued opportunities for investors are the commercial sector in Abu Dhabi, middle income housing in Dubai and the Saudi and Qatar markets that have been less impacted by the global turmoil than others.”
The firm sees potential for other property markets in the region to experience a return to growth in 2010.
However, Dubai was likely to remain “handicapped” by the high levels of new supply until 2011, it said.
As I undertand, 2010 is also the year for the proposed single GCC Currency i.e. GCC Monetary Union. I await an expert view of monetary unification on the Dubai property market (if any). Thanks
No matter what happens, it is difficult to trust the developers here. There are too many regulations, even if you spend millions, the property is not yours, you cannot change it to your liking. It is better to keep money in the bank and earn 8%.
Another attempt to 'flog a dead horse' - a very lame attempt to try to try to 'talk up' the market !! Instead of saying the market move downwards for the next 2 years, it sounds better to say it will 'recover in 2011', does'nt it ? Same time last year, these 'crystal ball' analysts would scorn & ridicule any and every slightest suggestion of impending doom, quoting mind boggling demand & supply equations !! Where are all those soothsayers now ? Reminds me of the Goldman Sachs prediction of 200 USD oil by end of 2008.
THIS ARTICLE IS NOTHING BUT SALES TALK AND SELF INTEREST! THEY KNOW NOTHING ABOUT THE ECONOMICS OF THE WORLD. iT IS THE BANKING SYSTEM OF THE WHOLE WORLD THAT IS KEY! IF THESE GUYS DO NOT UNDERSTAND THE BASICS THEN THIS IS WHY THEY ARE TALKING UP A MARKET THAT CAN NOT RECOVER UNLESS THE REST OF THE WORLD DOES ALSO. DUBAI IS DEPENDANT ON THE INTERNATIONAL MONEY MARKETS FOR BORROWING AND ALSO ON INTERNATIONAL INVESTORS TO INVEST HERE. IF THE REST OF THE WORLD DOES NOT RECOVER...DUBAI CAN NOT POSSIBLY EITHER. IT REALLY IS THAT SIMPLE.
The speculators have gone and won't be coming back so the only potential buyers will be end users. A big drop in prices and a huge increase in job stability for expatriate workers just might save the real estate market. But no one will buy until the market has completely bottomed out and banks won't lend until it does. 2011? Probably not.....Property cycles tend to be nearer 10 years in more mature markets. So maybe nearer 2020!
I think this is a great vote of confidence coming from JLL. They are really experts, unlike the developers and/or real estate agents who haven't a clue about market forces. I for one will revise my plans because of this assessment.
Its a good try by Jones, but keep in mind Mr Jones, the market is not going to recover by miracle, the sentiments of the buyers is hurt , and investors all over the world are scared. even after the global crisis is over people wil think twice to invest in Dubai becasue the laws are not clear , Investors are scared that becasu there is no transperency in the law anytime any new law would be introduced and their property will be worthless. Atleast i would not do so now.
How reliable are Jones Lang LaSalle's predictive powers? Well, in their 2008 newsletter for the UAE, they said: "The additional energy capital flowing into the GCC has significant implications for the regionâ€™s real estate markets and provides the basis for our expectation that these markets will continue to outperform those of more established economies over the next few years." One would have to say the reality was rather different. GCC property prices have fallen more sharply than the UK, US or Europe. Then, after Cityscape, the next JLL newsletter came out with this for Dubai: "While both rents and sale prices are expected to continue to increase over the short term (6-12 months), the rate of growth is likely to decline as the market matures and new stock is completed." Cityscape was six months ago. JLL predicted sales prices and rents would have *risen* by now, but in fact they fell off a cliff. Still, I am sure the bubble boys will be happy to overlook the poor track record of JLL prediction and hold them up as 'experts'.
But First fix the transparency here. Its scary that new rules pop up. Until then this is blatant propaganda and sales talk
I agree with Mr. Raj that transparency and clear rules will make things happen. I really doubt it that it will be ever the same again. Plus changing rules every morning is not gonna help either. I would recommend to retain the customers who spended in the first place and encourage the new ones, and this is only gonna happen if the previous customers have something good to say about the investments that they have done. Good Luck Dubai.