Muscat: Factors like the UAE's economic growth, increased employment, Dubai's safe haven status and improved rental performance have led to the return of confidence in the Dubai market, according to Jones Lang LaSalle 2013 report on the UAE real estate market.
"With many real estate project announcements over the past six months, this increased market confidence has become more pronounced," the report said, adding that the government is keen to create a more stable market environment as illustrated by the new mortgage caps from the UAE Central Bank.
Funding constraints will apply a natural brake on the pace of new development as usual real estate financing routes such as off plan sales, IPO/bond issues or bank lending are already challenged, the report stated. LTV ratio caps might also act as a deterrent as it will limit availability of mortgage finance to end users. In 2013, new development funding is likely to come from overseas cash purchasers and private money from other businesses.
An increased real estate investment is expected from China and South Korea due to greater business cooperation with the UAE. Chinese involvement is particularly pronounced in the retail sector and is likely to continue in 2013 along with possible investments in the hotel and tourism sectors. There is also increasing interest from Sub Saharan Africa, particularly from oil rich countries like Angola and Nigeria, the report revealed.
Buyers and tenants will have a multitude of choices in some sectors in 2013, with significant levels of new supply acting as a constraint on the overall performance of the UAE real estate sector, possibly offsetting the positive impact of improved market sentiment.