By Andy Sambidge
Gulf real estate investment volumes fell 43% last year, says Cushman & Wakefield study
Greater stability will be seen in property investment markets in the Gulf region in 2011, according to Cushman & Wakefield's International Investment Atlas 2011.
The study, published on Wednesday by the property consultants, said that the Middle East and Africa as a whole lagged the global property recovery last year - with investment volumes falling 43 percent.
In the Gulf, it said that confidence started to improve in the latter months of 2010 with increased investor appetite focused on quality, well-let assets and some increase in occupational activity as tenants took advantage of the market.
It added that yields appeared to stabilise although a lack of transactions may mask this to some extent and a gap still exists in some markets between buyer and seller opinions.
Within the UAE, the investment atlas said the challenging markets of 2009 and 2010 led to subdued levels of investment.
In 2010 investment fell by 39.1 percent from 2009 (excluding residential and transactions below $5m).
Although investment still took place it was predominately at a local investor level with smaller deals in terms of both size and price.
"We expect to see greater stability in 2011, however in line with the region as a whole, this investor activity will be restricted to established locations and quality products. Secondary locations and inferior quality buildings will continue to suffer," Cushman & Wakefield said in a statement.
A combination of increased local demand and more foreign interest, particularly from Asia, should bolster some GCC markets once the current situation stabilises, it added.
The report said it was too early to assess the full impact of the current unrest in parts of the region.
"However the uncertainty alone may potentially divert investment interest to other areas in the short term. On a more positive note, it may well be a catalyst for much greater future engagement with the region and may in some cases open the way to an increase in foreign investment over the medium to longer term," the company said.
Landmark Properties, a property brokerage agency based in the UAE, said on Wednesday it had witnessed an increase in interest, specifically from overseas investors seeking property within Dubai.
Michael Michael, director of sales at Landmark Properties, said investors were mainly from the GCC and Eastern Europe.
"Although the market is still relatively immature in terms of large institutional overseas investors, Dubai now seems to be back on the agenda for many parties," added Saeed Hashmi, head of valuation and advisory at Landmark Advisory. According to Hashmi, the type of property overseas clients are looking for varies, with many wanting to invest heavily across various property sectors.
A key thing for faster recovery is gaining back trust of foreign investments. Support should be offered to those victims who lost their money becasue the developper disappeared/closed/Bankrupted. Victims can go to RERA where they will be told that to file a case and win it. Sure they will win it but who is going to execute it if the guilty entity disappeared.. Executives of those entities are still seen enjoying their life fully as if nothing happenned and came back to market in other names to find other victims. If properties case filing cost is lowered and the execution is guaranteed so investors can get back something from those cancelled project and disapeared agents or developpers then recovery will go along.