Royal Institute of Chartered Surveyors says Q3 sentiment remains downbeat as demand slips
Office prices and rents in the UAE are set to continue to decline over the next 12 months as the country adjusts to lower roil prices, according to a new report.
The Royal Institute of Chartered Surveyors (RICS) said third quarter sentiment in the UAE's overall occupier market remains downbeat with demand falling for the eighth consecutive quarter across all sectors (office, industrial, retail).
The report highlighted a net balance of a 43 percent contraction over the past two years.
RICS’ latest global commercial property survey report also pointed to the steepest decline in demand for retail space, while availability of leasable space continues to rise across all sectors.
The report said that compared to Q2, rent expectations for next year deteriorated across all sub-sectors, with respondents anticipating a decline of around 4 percent on average.
In contrast, the average three-year rental projections are slightly more upbeat. Commercial real estate is believed to be overpriced according to 55 percent of respondents, up from 36 percent in the previous quarter.
Investment enquiries saw a further decline with a net balance of -36 percent of respondents noting a fall in overall demand at the headline level.
Foreign investment enquiries also faced a sharp fall in Q3, with the decline spread evenly through all three sectors.
RICS added that a continuous steady stream can be seen in the supply of properties for investment purposes, with prime asset values anticipated to remain firm, holding steady over the coming 12 months.
The current property cycle is viewed to be in a downturn phase by 45 percent of respondents, while 25 percent believe the market is approaching a floor.
The RICS Global Commercial Property Monitor is prepared every quarter and aims to capture sentiment of RICS members and other property professionals regarding both the current environment and the prospects for real estate in more than 30 countries.