Boston, MA -- (ReleaseWire) -- 04/14/2014 -- 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 to witness 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 as being Dubai. The true effects of the Expo will likely be seen closer to 2020, however. 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.
- UAE-based real estate developer Wasl Properties has completed the first phase of construction of the AED1.2bn (US$326.7mn) Dubai heritage project in the Wasl district. The first phase of the mixed-use development includes 55,000 square feet of space that encompasses 211 souq retail units, residential and office buildings, furnished apartments and a hotel. The second phase of the project will comprise the construction of 356 residential units, 53 offices and a 196-room hotel to be managed by US-based hotel operator Hyatt Hotels & Resorts. The second phase is expected to be completed by end-2015.
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