Easier availability of funding will spur property buyers to provide greater momentum to the real estate market, according to analysts.
Sana Kapadia, Vice-President, Equity Research, at EFG-Hermes, said: \"Greater liquidity needs to be made available for end-user financing. Then buyers are likely to help provide momentum to the real estate market. In the short term, we expect to see little more than a drying up of already low levels of liquidity. With local rather than foreign demand driving activity, we believe a substantial drop is unlikely.
\"Rolling over unsold product into rental portfolios will help to create future rental income. In some cases, selling completed units would work, given the shift in buyers\' mentality and move towards quality and tangibility.\"
Nicholas Maclean, Managing Director, CB Richard Ellis Middle East, said: \"The Real Estate Regulatory Agency [Rera] is one of the most important institutions within the Dubai real estate sector and has done an outstanding job in trying to bring order and regulation to a market place that has suffered undoubtedly from poor practices and dubious ethical conduct from some advisors and participants.
\"Its brief – to properly regulate the market place for the protection of owners, occupiers, developers and investors – will undoubtedly help to bring stability and transparency to a market which, over the next few years, must seek new forms of investment and finance.\"
According to CB Richard Ellis, what is vital for the market going forward is Dubai\'s proposed regulatory framework for valuation practice, the enforcement of the strata title and the landlord-tenant relationship in the emirate.
EFG-Hermes said the medium- to long-term outlook for the delivery of units and financing is mixed. \"On the financing side, we believe there is potential for a crowding-out effect if the government has to increasingly rely on local banks for funding purposes, given the difficulties that will be encountered in international markets,\" said Kapadia.
\"This will affect supply and could lead to less than our estimated 16,000 units hitting the Dubai market (market consensus is much higher at about 50,000). Real estate financing could see an improvement if Amlak and Tamweel\'s funding issues are resolved and the two companies return to the market, although a retraction of lending from foreign banks could offset this.\"
Maclean particularly noted the interest in the UAE commercial real estate, although he added that institutions that have looked at Dubai for investment opportunities have reacted with caution.
\"There has also been one batch of investors from New York, who have had their interest in the Dubai market rekindled, as they believe there may be the opportunity to acquire assets that are deemed to be distressed,\" said Maclean.
Kapadia said improving real estate regulations will increase the level of confidence and transparency in the sector at large.
\"Further regulations will help substantiate this position,\" she added.
Kapadia said the ease of setting up businesses has been good in Dubai and the recently reduced capital requirements will probably improve confidence in the real estate sector.
Maclean added that within the commercial sector, developers and master developers, who have unsold units within multi-ownership buildings will be waiting for the publication of new strata laws or regulations in order to make a decision as to how best to market unsold stock.
\"There are some locations within the GCC that either allow greater ownership of foreign companies or offer a simpler registration process for new companies. But at the moment the UAE remains the first choice for creation of new companies within the GCC.
\"More than 90 per cent of foreign corporates with Mena operations have their headquarters in Dubai. I expect this position to continue for the foreseeable future,\" said Maclean.
|
