INTERNATIONAL
“The supply overhang still looms large, homebuyers still lack appetite, transaction volumes remain anaemic, and banks remain cautious,” said Nabil Ahmed, analyst, in a recent report. However, there are some signs
of fresh confidence. In December, Standard Chartered put together a USD 115m funding package for the Fairmont Palm Jumeirah hotel, the first major real estate loan since the Dubai crash according to Cluttons, and Tamweel has relaxed its lending criteria, adding liquidity to the mortgage market. Transaction volumes are also recovering, according to Jackie Johns, Director of Sales at Dubai Luxury Homes. But with 2010 sales volume down 53 per cent, and the value of those sales down by 65 per cent, according to Jones Lang LaSalle’s figures, that’s still a long way from full recovery. Most buyers are focusing on
completed properties, the off-plan market has dried up completely.
‘With relaxed lending criteria transaction
volumes are also recovering.’ JACKIE JOHNS DUBAI LUXURY HOMES
BAHRAIN
Buyers are also motivated by hopes of getting a good bargain in a buyer’s market, putting further pressure on pricing levels; they’re also far more selective about the properties they will consider. According to Cluttons, “This has led to a two tiered market in which stock characterised by inferior build quality, poor maintenance contracts, and lack of views or amenities, are proving hard to let.” Abu Dhabi’s property crash has been slightly less dramatic than Dubai’s, but residential property prices are still 45 percent below the Q2 2008 peak, according to Jones Lang LaSalle, whose team believes the market could fall further. Jones Lang LaSalle says the market is in heavy oversupply, with 23,000 units expected to be completed this year against only 5,600 last year. That overconfidence is repeated in the hotel
Modern buildings being built on reclaimed land in the Gulf State of Bahrain.
‘Stock characterised by inferior build quality, poor maintenance and lack of amenities are hard to let.’
sector, where increases in room numbers are far outstripping growth in tourist numbers; hotel occupancy is currently below 60 per cent. Rents are still falling by 14 to 18 per cent a year, and there is currently little trading activity. There’s a marked imbalance
between an oversupplied luxury market, and a mid market that is inadequately supplied. Cluttons points out that Abu Dhabi’s attempts to promote itself as a high end tourist destination have left it with a glut of five star hotels; only now are a few mid market hotels opening. As with many newer property
Inset: Nakheel, the Palm. Bottom: Qatar World Cup site.
markets, prices are not fully transparent; there’s a dearth of good price information, though Cluttons is now helping to redress that with its Abu Dhabi Property Index giving data for both villa and apartment sales. Harry Goodson Wickes, Abu Dhabi Director for Cluttons, points out that the index considers only valuations and sales achieved, and doesn’t include the higher-priced new launch properties. “This helps it reflect the real story,” he says, “and act as a true barometer of the state of the market.” Cluttons, by the way, also publishes a Dubai index.
ELEGANT OMAN Oman is less well known than the Emirates and started its property development rather later. In common with the Emirates, though, property development has focused on the creation of a small number of high profile large resorts. While one development, Blue City, is stalled, that appears to be mainly because the project owners are at loggerheads, rather than simply because of the economic situation. Meanwhile, flagship project The Wave is going forward as planned,
PROPERTYdrum APRIL 2011 45
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