New Market Research Report: United Arab Emirates Real Estate Report Q1 2014

BMI believes that the real estate sector in the United Arab Emirates (UAE) will continue its post-crisis recovery in 2014, due to strong demand and continued construction. We predict rental rate increases in all three cities covered by this report, with the exception of a slight contraction in office and industrial rental rates in Abu Dhabi.

Sentiment towards the real estate market across the UAE has been improving significantly over recent quarters, with the consensus being that 2014 will continue a turnaround in a sector previously blighted by oversupply, instability and the hangover of a burst property bubble. Economic activity across the UAE is likely to remain relatively robust, as consumption and investment patterns continue their growth from 2013. This economic growth will strengthen both property fundamentals and capital markets in the UAE, resulting in a more favourable outlook for tenant retentions, rental growth, development activity, financing and asset values.

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The retail sector remains the strongest in the UAE, boosted by Dubai's status as an international city and a tourist destination. Industrial does not show any growth, but makes up for it with incredible stability and high prospects for the sector now that the 2020 World Expo host has been announced (Dubai). The office sector remains the weakest, with Dubai and Abu Dhabi having vacancy rates well over 30%.

The UAE's various real estate sectors are developing in different directions and at varying rates, with Dubai and Sharjah outperforming Abu Dhabi. While undergoing improvements, the commercial market in general continues to suffer from oversupply and is forecast to undergo limited growth in the short term. However, BMI believes the market reached its nadir in 2012 and that positive sentiment growing around the sector (as shown by our data) will see continued growth in 2014, providing economic fundamentals remain on course.

Recent Developments

* US-based property services firm CBRE has reported that prime retail rental rates in Dubai rose by between 5% and 6% in Q213, according to Zawya. Some shopping centres in the emirate are between 90% and 100% occupied, which is pushing up prices. New projects are underway, with 48,000m2 of mall space to be released onto the market by the end of 2013 and a further 144,000 square feet expected in 2014.
* Property investors and sellers in Dubai have rushed to complete purchases following the Dubai Land Department's announcement that it would implement a 4% selling fee. Transactions were worth more than AED5.1bn (US$1.4bn) on September 29 2013, ahead of the implementation of the increased charge on October 6 2013. The Dubai Land Department previously enforced a registration fee of just 2%, but hopes the inflated figure will deter speculation in the property market.

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You may also be interested in these related reports:

- United Arab Emirates Business Forecast Report Q1 2014
- United States Real Estate Report Q1 2014
- Kuwait Real Estate Report Q1 2014
- Qatar Real Estate Report Q1 2014
- Singapore Real Estate Report Q1 2014