Since the bursting of the UAE real estate bubble in late 2008, the market has struggled to get back on its feet.
Dubai saw property values slump 45 per cent last year, the worst performer out of 46 markets monitored in property consultancy’s Knight Frank global house-price index. Prices had risen 48 per cent in the 12 months through to March 2008.
However, the first quarter of 2010 has shown that some real estate developers have started to break away from the downward trend which has characterised the last 18 months, with their uptick in performance being driven by the completion of projects.
Property giant Emaar has had a noticeably strong start to the year, with profit soaring by 221 per cent on an annualised basis to $207m and revenues jumping 87 per cent to $786m.
Meanwhile, Dubai’s Union Properties posted a 66 per cent annualised profit growth to AED50m and Abu Dhabi’s Sorouh Real Estate posted a healthy AED131.6m profit.
In stark contrast, Abu Dhabi’s largest property company Aldar has seen its revenue nosedive by 54 per cent to AED227m, due to a lack of property sales and limited deliveries. Similarly, Deyaar, Dubai’s second-largest property developer by market value, has recorded a first quarter loss of AED100m.
However, Aldar, along with many other UAE based developers is going to be seeing major project handovers in the coming quarters, which raises the spectre of supply and demand.
In the last five years, 60 per cent of the housing stock comprising luxury and secondary homes was targeted for 16 per cent of the market who were mostly investors and speculators.
Demand will be the main driver of a healthy and sustained recovery of the property market. Going forward, the market needs to re-position itself in order to cater to the needs of the lower and middle segments of the property sector.