The UAE has seen a noticeable pick-up in investor interest in projects currently on hold or previously cancelled, according to real estate firm Cluttons.
The property specialist said it has seen a surge in demand for feasibility studies over the past few months as the real estate market gradually improves.
"Cluttons has witnessed a noticeable pick up in feasibility activity and due diligence being undertaken by developers and investors into projects currently on hold or previously cancelled, with the numbers being under close scrutiny once more," it said in a statement.
Feasibility studies aim to objectively uncover the strengths and weaknesses of an existing or proposed real estate project. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.
Jonathan Fothergill, director of UAE valuations at Cluttons said: "Clients are requesting everything from considering the feasibility of the refurbishment of a residential apartment building in Deira to looking at the feasibility of substantially expanding or refurbishing an existing shopping mall."
He added: "In Dubai in particular, we have a legacy of developers and financiers clinging to the misguided belief that supply will generate demand, which has severely impacted the residential and commercial markets. Also evident is that a number of unnecessary projects would never have come to fruition if reliable feasibility studies were undertaken prior to financing."
In recent months, the pick-up in developer activity has been particularly noticeable in Dubai, he said.
Nakheel has recently started development works on apartments, villas and retail on the Palm Jumeirah as well as initiating expansion of both Dragonmart and Ibn Battuta malls and the development of community malls.
Emaar has also started a new residential project in the Greens while considering the expansion of Dubai Mall.
Steve Morgan, head of Cluttons in Dubai said: "Feasibility studies are key to successful investment and development in a maturing property market. Like valuations, consistent and reliable feasibility studies are essential for sound financial decision making, performance analysis, transactions and providing proper development advice."
Morgan added: "On-going problems in the local real estate market have highlighted that an inability to understand the market value and feasibility of real estate projects can have negative consequences.
"In particular, we see severe impacts on the market when loans are offered to developers based on credit rating as opposed to market value and feasibility."
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