Property Transactions down by 20% in Q2 2009

By the end of Q2 2009, falling s Dubai and Abu Dhabi property values have slowed down significantly and prices were on the rise again in many areas. Consolidation beams on the horizon as value investors that had been dormant in wait of market changes since Q3 2008 are resuming activities in the market. The trend is picking up since a large number of development projects in both UAE cities are either completed or near completion and this adds further incentive to these investors since it removes substantial risks from their executive process.
Still, however, for the volume of transactions in the sector to improve substantially they are still dependant on the restoration of the business climate – meaning that when this happens, banks and financial institutions in general should ease on their lending criteria.
In Q2 2009 the number of transactions went down by about 20 per cent in comparison to the previous figure of Q1 2009. This can be justified by the fact that, since prices kept falling, an increasing number of owners willing to exit the market at the outset decided to hold fire and see whether the market would stabilise again and continue growing. Nonetheless, potential buyers were at the same time expecting prices to reach their lowest point. Dubai Land Department has released data that shows nationals from Pakistan and India have become an important majority in the circle of property buyers during the Q2 2009 period. Iranians, UK expatriates and UAE nationals themselves complement this top 5 list of buyers when it comes to the volume of these property transactions.
The forecasting for the property market is intrinsically linked to the general economy. At this stage, the economic outlook for the UAE is unclear especially due to a number of external factors but as oil prices are already stabilising at US$60 to $80 per barrel and this range is quite a reasonable for the UAE, positive prospects are in order.
What results is a constant cash flow into government safes and this consequently guarantees that every infrastructure project already registered will be executed. The UAE government has been focused on ensuring the Emirates’ place in the competitive business market of the area. It has even abolished the minimum capital requirement of AED 150,000 for opening up Limited Liability Companies in the country to support prospective entrepreneurs with setting up Small and Medium Enterprises there.
The worst seems to have been overcome, especially when most companies in the UAE had to shed jobs in face of the economic downturn. Job security is vital in determining the decision making of the potential owner-occupier.
The next quarter is a period many hope to be a period of consolidation for the property market in the Emirates. We at Hamptons, through extensive property valuation research, believe the value of property is possibly not decreasing any further during this period. But we also do not expect volumes of property-related transactions to improve so quickly since summer and the holy month of Ramadan have always traditionally been periods of quietude in the United Arab Emirates market. Both volume of transactions and property values themselves are likely to rise during the last 2009 quarter for a number of reasons such as increase in job security, return of value investors and likely relaxations in mortgage lending criteria.

According to research carried out by Hamptons International, residential estate agents specialising in UK and International sales, lettings and property management.

News submitted by Iwona Szymańska, Hamptons International