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Tue 24 Mar 2009 11:47 AM

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Recovery signs seen in ME real estate - report

But Jones Lang Lasalle still predicts property prices will continue to fall for a year.

Signs of recovery in the Middle East property market are emerging but prices will fall for the next 6 to 12 months, a new report from real estate adviser Jones Lang LaSalle said on Tuesday.

The study for the MENA (Middle East and North Africa) region said that requirements for recovery such as rising oil prices and improved liquidity through the recapitalisation of the banking sector in the form government bailouts has already begun.

Falling property prices presenting good deals for investors would stimulate much needed demand in the market, the report added, citing that transactions in Dubai have doubled over the last month to $500m up from $250m.

However, the study warned that the timing of the recovery will vary across the Gulf and predicts no significant upturn in the market until 2011, with prices remaining flat in 2010.

“Driven by vanishing liquidity and the subsequent decline in investor demand, many of the regional markets have been characterised by a negative spiral which has been driving prices down over the past six months,” the report said.

“The key to reversing this “credit default spiral” will be a return in investor confidence. Just as markets feed off negative sentiment when they are declining, so they will feed off positive sentiment once the seeds of recovery are recognised,” it added.

A number of factors have contributed to a more positive outlook for the MENA region, the report argued.

Oil has risen by around 25 percent in the last month, going over $50 last week for first time in two and a half months. At 11.20am on Wednesday a barrel of Brent crude was $53.57.

There has been significant injection of liquidity across the Gulf in the last few months. Kuwait last month approved a stimulus package worth $5.08bn and Abu Dhabi pumped $4.4bn into the system to recapitalise local banks.

The Dubai government in February said it would issue $20bn in long-term bonds, the first tranche of which ($10bn) has been fully subscribed by the UAE Central Bank.

Jones Lang LaSalle said the correction was necessary to create a better regulated and more transparent property market across the region.

Arabian Business: why we're going behind a paywall

jay 11 years ago

Jones Laing La salle, earlier on in 2008 your company kept calling Dubai as a bright spot in global property scene and Abu Dhabi the safe haven'd future. Since then prices have halved and investors are worried that their developers dont even have the money to begin construction because they couldnt afford to pay for the land in full. Need I say more?

Hassan 11 years ago

Looks like people are in hurry to buy the discounted property but they will loose as prices are further expected to dip around 20 to 30 percent as per my real estate friends in leading real estate companies from Dubai. So folks hold on and wait for June 09...

paul 11 years ago

These guys just don't give up do they? Property will not recover until there is a balance between supply and demand. With huge supply still coming online, and the population falling, things will get a lot worse for investors before they get better. The oil price is irrelevant for this - how many people are employed in oil? Very few compared to the number employed in construction and real estate. A higher oil price will not fill empty apartments and without more people, property prices can only fall further.

geriant 11 years ago

It beggars belief that this spin is printed anywhere except on perforated rolls. Manipulating numbers is how Dubai and many other places in the region fell into a hole of no-confidence. Clearly the agents at this firm have nothing better to do than suck their thumbs, because no actual facts are presented here. Whose numbers are these, for example. Some credible agency that doesn't make its money selling property. Methinks not.

Talib 11 years ago

Nice try, lets say reserve this report for 2011, might sound credible then, I reckon sometime late 2009 or early 2010 government's stimulus package will start transalating into infrastructure development, yes construction will pick up, but will hold precedence over housing. The number of retail and commercial units stated for completion will add to developers worry (over supply). Real estate market sentiments are badly hit, its time for developers to "bite the bullet'' Its a mind thing for now, it will take some time for investors to reinstate their belief in realty. Developers should sit back and take a note of present circumstances, RERA kind of market regulating apex bodies should be given more authority, unrealistic escalation of properties rates by middlemen and "fly by night" freelancers should be totally curbed. There should be more transperancy in ownership rights, Developers promising visa should show more clarity and "please stick by it'' or else compensate. Reams and reams of especially print media advertising properties should come under a "watch dog scanner" helps in keeping a check on market aberrations. (Saves paper too). :Companies show moderation in payscale and bonuses (remember AIG): helps curb inflation. hopefully in time to come, sunny days will return much brighter :) .......Cheers

Sam 11 years ago

Many of those who are sceptical about the report insist there are no figures to support the claim. Well, why don't we reveal the figures ourselves. We can a better job than those who are claiming the market is improving. I will start: Discovery Gardens - 25,000 units of studio, 1 bed and 2 bed pproperties, so far max 5,000 units occupied, rest is like a ghost town. Desperate property owners have resorted to stopping people on the street and asking if interested in renting a property. Do you know any other rough figures in other developments. We might get a good picture we reveal the info here. Ciao

paul 11 years ago

Can someone please explain to me why people seem to think getting a residence visa with a property is such a big deal? You can go to Fujairah and set up a freezone company for a few thousand dollars. Job done. You get a visa, can sponsor your family and live anywhere in the UAE. So if the visa is such a big deal, negotiate 3k USD off the price of a property (easy these days, couple of hours of falls!) then head over to Fujairah and set up your FZ company.

Zia 11 years ago

Recently i was going through an article on dubai leading property buying and selling websites and below is what i found. According to a Reuter poll, property prices in Dubai are likely to slump 37.5% on average this year with real estate units under construction losing half their value as the emirate suffers an economic downturn. According to the median forecast of 10 analysts at banks, investment firms and research institutions, residential real estate prices in Dubai will recover only in 2011 after reaching a bottom in 2010. Analysts said off-plan properties would face the brunt of the price decline, with the median of 6 responses expecting prices to drop 50% in 2009 and 10% in 2010. Some brokers have said luxury units on the Palm Jumeirah have fallen at least 40% since the autumn. The poll showed that completed home prices could drop 30% in 2009 before climbing 10.5% in the next 2 years. Even though prices have fallen sharply in Dubai, analysts still regard the market as overpriced relative to fundamentals. Rents could retreat 32.5% this year and 5% in 2010, according to median poll responses. Four of the analysts said rents could fall as much as 40% on average before year-end. Property Sellers in Dubai needed to clarify employment and residency rights of foreign property owners to restore confidence before buying would resume. I will only buy if i get a Visa and have a right to work on that Visa otherwise NO THANKYOU VERY MUCH.