Much-Needed Flexibility Eases the UAE Property Market

Although the most intense phase of the economic crisis is now over, and with the property market in the UAE having recovered much of its confidence in the last year, the latest research demonstrates that there has been a decline in both sales and rental values in most sub-sectors of the property market. This is largely due to an increase in new supply entering the local property market for the UAE, most of which is coming from Dubai.

Dubai properties for sale and rent have fallen more in value in comparison to other areas of the UAE, and as a result, there has been an increase in demand from residents living in Sharjah to take advantage of falling values in Dubai’s commercial and residential property.

Nevertheless, commercial property in Dubai, particularly unused office space, has seen rising interest over the last six months, with tenants taking advantage of the falling rents as well as reflecting an increasing confidence in the broader macroeconomic position of the region.

In Abu Dhabi, there has been a similar decline in the overall value of properties, but at a much slower rate than the fall in Dubai. Abu Dhabi remains one of the more inflexible property sub-markets, with fewer properties available for occupancy. The low supply has meant higher rents for residential and commercial property, though still lower than they were a year ago, partially due to slightly decreased demand because of the financial crisis.

Nevertheless, a significant amount of new developments in Abu Dhabi are expected to re-start in 2010, having been put off in 2008 and 2009 because of the crisis of confidence in the property market. Once property developer and investor confidence is restored, the signs are that the overall UAE property market will return to the pre-crisis status quo.