Dubai price falls creating opportunities
Property price falls in Dubai are creating real estate investment opportunities in a buyer's market that is likely to see increasing demand, according to a new report...
Softer prices allow potential property purchasers a strong negotiating position across all real estate sectors and this ‘favourable' position is increasing demand and creating selected pockets of growth despite a general slide in prices, according to the latest report from property consultants Cluttons.
Cluttons, the real estate specialist that has enjoyed a dedicated presence in the Middle East since 1976, says its market report for the second quarter of 2010 indicates that in the residential market buyers are able to negotiate with greater effect and all properties are under pressure to sell at competitive prices, often well below asking price.
‘Deflated prices are driving demand by discerning buyers, with interest directed at those preferred properties that offer value for money, clear lifestyle amenities and desirable extras such as views or green space,' the report says.
‘In a similar vein, villas are holding their value better than apartments as consumers look to upgrade their living environment over the summer,' it adds.
The commercial sector is also skewed towards the occupier, with oversupply allowing cost conscious tenants to migrate to offices offering lower rents in competing buildings. ‘This is an ideal time for businesses looking to upgrade or downscale their existing office space within Dubai. The areas that are holding their value best continue to be the DIFC and Downtown's Emaar Business Square, but even these are under increased pressure from other office zones such as Deira and Bur Dubai,' the report adds.
The industrial and logistics sector are also following this trend, with landlords now taking the decision to offer long lease agreements, a new step for the Emirate. ‘This move demonstrates increasing maturity in the market and will offer increased benefits to tenants, who are able to dictate their needs during the negotiation process. The best performing Industrial area in Dubai is the JAFZA, and in particular JAFZA North, an area that offers premium warehousing in terms of price and Free Zone status,' it says.
‘Ongoing price reductions have opened up the Dubai property market for a wider selection of potential purchasers, who are becoming increasingly discerning in their property search. Whereas once the landlord or seller held a strong position, we now see buyers negotiating with landlords to bring prices well below the asking price,' said Steve Morgan, head of Cluttons UAE.
‘Equally, pressure from occupiers in the commercial and logistics sectors, has meant that landlords have had to increase lease length, which we feel to be a positive step for the market. The continuing deflation of prices, whilst painful in the short term is setting Dubai up well in the Global arena to benefit from expansion of existing and relocation of new business into the city as the Global economies start to recover,' he added.
Cluttons also released reports on the property market Abu Dhabi, Bahrain, Dubai, Oman and Saudi Arabia looking at the impact of the current economic situation on real estate markets throughout the region.
They say that following several decades where property development has been seen as a driver for economic growth, especially in Dubai and Bahrain, governments are now looking to major infrastructure projects, policy Change and investment in education as routes to set the foundations for future economic growth.
The majority of real estate sectors in the region are witnessing a short term oversupply which has led to a reduction in capital values and rents as occupiers seek to take advantage of favourable lease terms. There is still a lack of Grade A office space in most locations and emphasis must be on well planned future development linked to infrastructure.
Source: www.propertywire.com