Political instability could benefit UAE real estate

15 March 2011

UAE can solidify its position as regional hub

The political unrest in the Middle East and North Africa region could benefit the UAE’s real-estate market as companies look for a stable base in the region.

Analysts believe that the UAE, which has so far been immune to anti-government protests, can benefit from the unrest currently sweeping through the rest of the region.

“Recent events in region reinforce the strategic importance of the UAE in the wider region,” said Blair Hagkull, chairman of Jones Lang LaSalle Middle East and North Africa, at the launch of the firm’s Top Trends for UAE Real Estate in 2011.

UAE real estate supply 2011
Asset Abu DhabiDubai
Office (sq m)508,0001,115,000
Residential (units)25,00025,000
Retail (sq m)331,000140,000
Hotels (rooms)3,0003,400
Source: Jones Lang LaSalle

“Due to the geopolitics and resources of the region, what happens in the Mena region is important for the world. The UAE will be able to build on its position as the regional hub,” he added

The UAE’s transport infrastructure plans are expected to increase the attractiveness of Dubai and Abu Dhabi to foreign businesses in 2011.

 The UAE is planning to spend close to $45bn on its transport infrastructure programme in the coming years. In addition to the planned $11bn rail project, the government is adding extensions to the three existing international airports and building a new port.

The UAE’s Etihad Train Company has invited prequalified firms to submit bids by 4 May for the first civil engineering contract for the first phase of the federal railway. The first phase of the railway involves building a 265-kilometre track between the port of Ruwais and gas fields at Shah and Habshan. When completed, the rail network will link all of the seven emirates (MEED 4:3:11).

Abu Dhabi Airports Company (Adac) recently invited prequalified consortiums to submit bids by 10 July for the construction package on the midfield terminal at Abu Dhabi International airport (MEED 4:3:11).

The first phase of the Khalifa port is scheduled to open in the fourth quarter of 2012 and will have an initial capacity of two million twenty-foot equivalent units (TEUs) a year. Four later phases will see this capacity rise to 22 million TEUs and 35 million tonnes of cargo by 2028.

The UAE’s transport plans will improve internal access and enhance the country’s position as the region’s main transport and logistics hub.

“The planned port and airport projects can support the logistics market in 2011,” said Craig Plumb, head of research, Jones Lang Lasalle.

The analysts add that there will be no quick fix for the UAE’s real-estate market, which crashed during the economic downturn that began in 2008.

“We don’t think the market will recover as a whole in 2011, that won’t start to happen until 2012,” said Plumb.

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