The coming year will be one of consolidation for the United Arab Emirates real estate sector with recovery and growth unlikely before 2011, it is claimed.
The key will be attracting back disillusioned investors, especially those from overseas, according to Mohammed Nimer, chief executive of MAG Group Property Development.
‘With the onset of the financial crisis at the close of 2008, many of us in the property and real estate world expected 2009 to be one of the most challenging of modern times. It was certainly that – and then some more,’ he said in an interview.
‘Most striking has been the extent to which 2009 has seen major global corporations taken down in size or even toppled as well as smaller players squeezed out of the market,’ he added.
He described 2009 as a rollercoaster ride for virtually all of the real estate sector, not only in the Gulf but across the globe.
‘However, there is no doubt that the psychological effect of coming to terms with a changed world will no doubt eventually filter through with a positive impact on the property market,’ Nimer said.
‘I believe 2010 will be a year of further consolidation before buyers in significant numbers, particularly from abroad, will be tempted back into the market.
We also have to remember that we are currently still living with an oversupply in the market and that will have to work its way through,’ he added.
He expects that everyone in business will continue to experience challenging times, gradually easing throughout 2010.
‘The market, as it consolidates, will benefit from more traditional and sustained business approaches as opposed to the speculative models that took over in 2007 and 2008 and met their inevitable end in 2009,’ he explained.
‘As confidence is regained, the underlying foundations of the excellent business economics of the UAE remain in place for a return to a prosperous and sustainable future by the latter end of 2010 and forward into 2011,’ Nimer added.
Indeed, last week the latest global property report from AT Kearney showed that the UAE could be one of the first real estate markets to benefit from falling prices.
‘Low real estate prices could put the UAE back on track for attracting foreign investors, who are already interested in the region for its other advantages,’ said Dirk Buchta, managing director at AT Kearney Middle East.