The UAE’s commercial proprty market is performing so well that it is leading the way in the global recovery in the midst of an “improving macro climate” according to the most recent RICS Global Commercial Property Market Monitor. Growth indicators are increasingly evident worldwide and results are pointing to a slightly faster improvement in retail real estate compared with the office and industrial sectors.
RICS said that the UAE and Japanese real estate markets are both at the forefront of these trends. The Occupier Sentiment Index (OSI) and the Investment Sentiment Index (ISI) are both in positive numbers and the12-month forward expectations for rents and capital values are progressively upbeat. This reflects the expectation that the economic recovery currently underway will continue to gather pace.
The Occupier Sentiment Index is currently standing at 46 for the UAE. It is the highest reading since 2008, marking four consecutive quarters of improvement and, while availability is still expanding, it is doing so at a declining pace. Consequently demand is beginning to outstrip supply.
Rents are anticipated to increase further in the next three months and the headline balance should be nearing the best level since 2008. The Investment Sentiment Index for the UAE increased to 53, which is its highest level on record. Enquiries are up across all sectors, and office and retail are the strongest performers.
The survey respondents projected a higher number of investment transactions over the next three months, and the supply of distressed properties is expected to continue to fall. Other markets posting similar trends in both investor and occupier sentiment include China, New Zealand, Russia, South Africa, and the United States.
RICS chief economist, Simon Rubinsohn, stated recently that the improving global economy is certainly not without its challenges, “but the lessening of downside risk is helping to support commercial real estate markets.”
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