A bounce in the earnings and share prices of some UAE real estate developers suggests the worst is over for the sector, but does not indicate a full-fledged recovery because property buyers remain very cautious, analysts say.
Property prices in Dubai fell 50 per cent or more in the last several years, hit by the global financial crisis and the emirate’s own corporate debt problems. But a new report by consultants Jones Lang LaSalle said Dubai saw pockets of growth in residential housing prices in the first quarter of 2012 compared to a year ago, while office rents were bottoming out.
The sector is being boosted by population growth – as Dubai’s economy grows, some of the workers who left during the depths of the 2009/10 corporate debt crisis appear to be returning – and by a strong tourism industry.
Both factors have helped industry bellwether Emaar Properties, which in recent years has diversified its portfolio to include more retail and hospitality operations.
“Population growth has remained quite strong, 5 per cent during 2011, and this is obviously a key driver of new demand within an expatriate-dominated city such as Dubai,” said Matthew Green, head of research at property consultants CB Richard Ellis in the UAE.
“There has been quite a considerable pick-up in tourism traffic into Dubai, Abu Dhabi and Oman, and probably to a lesser degree Qatar. I would say this is a direct impact of the Arab Spring,” he said.