The UAE’s property market witnessed mixed results in the first half of 2015 with Dubai losing the steam it had amassed over the last two years, hinting at a maturing market capable of sorting itself out by steering clear of extremes, said a report.

On the other hand, its neighbouring emirate, Abu Dhabi continued to see a calm and consistent rise in rental and trading values, introducing regulations that are certain to add to the market’s charm manifold, stated Bayut.com, a leading real estate portal, in its study.

Though naysayers projected a gloomy scenario for Dubai’s market, the fact remains that the on-ground situation is much better and far less troublesome than predicted by pessimists, it stated.

The Dubai market has indeed seen growth slowing down, but the size of the market is constantly increasing thanks to the continued trust of investors in its ability to bounce back and its rising status as one of the most important business and leisure hubs east of Africa, the study added.

According to Bayut, the performance of the UAE property sector in the first half exceeded expectations, with an industry-wide economic diversification acting as the key driver for sustained growth.

Less and less dependence on oil means Dubai is now far from the effects of the fuel price crunches like the one currently persisting, and boasts of an economy whose beauty is not merely skin deep, it stated.

The real estate portal pointed out that the concerns regarding the property market slowdown have somewhat been  exaggerated and inflated.

The market, it stated, was undergoing a much-needed easing that would help it paddle away from troubled speculative waters.

"Though the slowdown continues, it will only be some time before things turn around and head upwards. We reckon things will move the other way come 2016 and rise there from, and our optimism banks on bright prospects of a continuous rise in the emirate’s population, its status as a top tourist resort, its world-class leisure and hospitality facilities, and its importance as the core regional business hub," said Haider Ali Khan, the CEO of Bayut.com.

"In our last market report, we highlighted a number of factors responsible for the market slowdown, such as the Dubai government’s measures against market overheating, a stronger dollar, Russian crisis and sanctions, oil price crunch effecting foreign investors, Eurozone issues and a dreary IMF forecast for the global economy," he stated.

All of these, said Khan, in no way point to a fault within Dubai’s structure itself. "But the strongest factor that remains in play is the market adjusting to shed off the excessive weight of prices it put on as the values rose over the past few years. The property sale values dropped between 5 and 10 per cent in H1 compared to 2014," he added.

According to him, the rental returns continue to hold strong in Dubai, with some areas even registering growth in values. "Overall, its rental returns remain one of the best in the world (5 to 7 per cent) and offer enough impetus to an investor class to continue its endeavours in Dubai," he stated.

The government has introduced better laws to secure investors’ interests and has been piling pressure on developers to deliver projects on stipulated dates. Positive measures like these, sadly, are rarely discussed or highlighted, he added.

On the property price decline, Bayut chief said it could be attributed to many reasons including nervous sellers, whose lack of confidence – or experience – in the market made them sell short.

But the phenomenon has been a blessing in disguise for tenants, many of whom are now planning to make the jump to homeownership courtesy of the market price correction, he added.

On the UAE capital's property scene, Khan said the first half recorded continued growth in the rental and hospitality sectors in Abu Dhabi.

"At the same time, the residential sales, retail and office sectors remained stable. A reduction in government spending was expected this year following the decline in oil prices, which could have slowed down the pace of demand growth, but this has not happened during the first half of the current year. In contrast, the short-term supply of units in the market was generally constrained, leading to relatively stable market conditions," he stated.

Following the approximately 11 per cent growth in 2014, residential rental growth in Abu Dhabi continued during the first half of 2015 owing to the limited quality supply across all prominent locations and the removal of the rental cap.

The residential sales market remained stable, following the double-figure growth in 2014, but failed to increase, probably due to a downturn in investor sentiment amid the reduction in oil prices, said Bayut in the report.

In order to safeguard the tenants’ interests, Abu Dhabi Department of Municipal Affairs is planning to bring out a provisional rent index by year-end that would keep the rental escalations in check.

Abu Dhabi had removed the five per cent  rent cap in November 2013, the report added.

From an economic angle, the property market of the capital remained resilient despite the oil crunch. The Abu Dhabi Urban Planning Council (UPC) approved 22 new projects during the first three months, thus shrugging off all concerns of weaker oil prices affecting the property market.

Many Abu Dhabi-based developers including UPC, Tourism Development and Investment Company (TDIC), Department of Municipal Affairs, Zaya, Aldar and Al Forsan Real Estate utilised Cityscape Abu Dhabi to its maximum potential and announced an array of projects at the event, said the report.

The office market remained stable following two successive quarters of recovery and growth, yet demand still remained relatively flat and there were limited supply completions.

On the tourism front, Abu Dhabi fared better thanks to the various government initiatives to boost tourism. The hospitality market was the strongest performing sector in the first half. Interestingly, the emirate saw an increase in hotel average daily rates (ADRs) for the first time since 2010, which could be a sign of things to come, the report added.

“Dubai is a reality that cannot be ignored anymore, not for long at least. The emirate has evolved into a quality travel and tourism destination and an important regional business hub bridging the West and East, leading to bright prospects for the emirate’s job market in the coming months and years,” stated Khan.

"We are likely to see heightened activity in the realty sector in the near future that will shun away notions of a market deadening or crash," he added.
 
According to him, Abu Dhabi is set to see a planned surge in real estate activity, with the setting up of a rent index and additional powers for municipality likely to make the market much more regulated and streamlined.

"Abu Dhabi has always been seen as a stable investment field and the stricter regulation of the real estate market is set to boost investor confidence further and make the UAE capital a favourite playground of realty players," he noted.

On the future outlook, Khan said: "The UAE market has moved beyond the oil wealth it was once famously known for. The nation has instilled the fundamentals of learning, imagination, innovation, invention and instinct to prove its mettle to the world and beat the odds time and again."

"Both Abu Dhabi and Dubai boast of monolithic resilience that is set to see the two ward off critics and shine brighter in the days to come," he added.-TradeArabia News Service