Green issues will be pushed to the back burner, says Jones Lang LaSalle report
While the best quality projects will continue to perform well, average prices in the UAE’s real estate market are expected to fall further in 2012, says a report from real estate investment and advisory firm Jones Lang LaSalle.
Alan Robertson, CEO, Jones Lang LaSalle MENA said: “In 2012, the real estate sector will inevitably be susceptible to any potential geo-political changes within the region. The worsening European debt crises and its impact on the global economy will be the other major external challenge to the UAE real estate market in 2012.”
In publishing its 2012 report, Jones Lang LaSalle set forth key trends for the UAE’s real estate sector. “The UAE real estate sector will generally see more realism in 2012. Wit consolidation and rationalisation of projects, there will be more focus towards customer requirements and long-term commercial viability. In 2012, affordability will be to housing what budget hotels will be to the hospitality market. Banks are also expected to continue their more selective approach towards lending criteria,” the report said. Occupiers and tenants in 2012 can choose from a greater supply in many sectors.
The report said while further green measures are likely to be introduced, sustainability is not likely to be a real game changer in 2012 as the market will remain concerned with more pressing short-term issues.
Quality of estate management will be one of the factors determining winners and losers as it will be a critical factor in attracting tenants. There is likely to be a shift in emphasis from the management of individual assets to the management of the public areas within master planned projects in 2012. Preferred buildings will outperform others in an increasingly two-tiered market.
The UAE hospitality market will benefit from continued investments in tourism-related infrastructure like airports and airline fleet expansion in 2012. The Dubai hotel market will see improved performance while the Abu Dhabi market will stabilise after a period of decline in 2010-2011. The UAE’s safe haven status will continue to be a beneficial factor for the sector during 2012.
There may be repositioning and/or redevelopment of struggling retail centres as increasing competition continues to polarise centres into winners and losers in 2012. Poorer performing malls will need to be repositioned to remain competitive. Some mall owners may also need to consider converting shopping centers into non retail uses.
In Abu Dhabi, the ongoing rationalisation among real estate related government agencies like Aldar and Mubadala as the government rethinks its real estate agenda, reduced financial support from the government and increased emphasis on financial viability of projects across the board will result in delaying or scaling down of projects like Saadiyat Island and Capital District.
Craig Plumb, Head of Research, Jones Lang LaSalle MENA concluded: “Financial viability will play an increasingly important role as the UAE real estate market becomes generally more realistic during 2012. We can expect ‘more’ positive signals from this year, with some of the key words being affordable housing, budget hotels, infrastructure spending, estate management, selective stability, financial viability, new realism, tenant friendliness and sustainability across the UAE real estate market.”