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2012: A good year for UAE realty

/ 18 March 2012

As the CEO of the leading property portal in the UAE, I often get asked for my thoughts and opinions on the real estate industry.

For obvious reasons, my answer today will be very different to that of two years ago. At present I see stabilisation and steady growth. Unfortunately, I also see oversupply with the number of available properties outstripping current need and demand.

There has clearly been an increase in demand for properties, but not enough. That said, if current trends continue, I’m sure 2012 will be a good year for the UAE real estate market.

Recent press has pointed to an issue with build quality. It’s no secret that some of the buildings in Dubai haven’t been looked after and are now suffering the consequences of neglect or poor maintenance.

Dubai has some great developments and communities, which will always be attractive. But, whereas in the past buildings in popular areas would retain their value based on location alone, now we are seeing a shift towards emphasis on quality.

For example, the Marina is a sought-after location with lots of buildings offering a wide choice of layout, finishes and facilities. Some of the poorer quality buildings that have lacked adequate care and maintenance in recent years are now starting to look old and tired and the high amount of available stock on the market means that people no longer have to put up with this.

It’s notable that buyers and renters are now seeking out quality developments such as Silverene Towers where prices have risen by over 25 per cent in the last six months.

This drive for quality can also be seen on the Palm Jumeirah where prices for an apartment in the Oceana development have gone up 20 per cent in the last twelve months. Similar developments less than 500 metres away have seen barely any change at all. I was pleased to see the Abu Dhabi government release a statement confirming their commitment to their 2030 vision.

Drive had slowed to a crawl as funding and investments in the city had stopped and this public statement of commitment to develop road, rail, port and airport infrastructure will doubtless boost both industry and consumer confidence.

We should not expect this to result in a sudden overnight increase in sales or rentals, but it is definitely a step in the right direction and encouraging for the region. The role that banks play in the real estate industry and the economy as a whole cannot be overlooked. It seems obvious but a lack of funding is hurting growth and will continue to do so unless something changes soon.

Although we all want banks and financial institutions to be cautious, we need to remove some of the major hurdles currently in place that are preventing sales and rental agreements. A little flexibility would allow growth while still protecting our economy.

Brokers are now reporting a return to the dreaded one cheque rental days. I’m sure all landlords like the security that one cheque offers but we have to ensure we don’t price people out of the market with potentially unreasonable requests.

Gone are the days when employers pay employees’ rent directly or in totality. Although this does still happen it’s less frequent and with banks not lending we’re left with lots of people unable to find suitable, affordable accommodation.

The writer is a chief executive officer of propertyfinder.ae

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