Outlook for the UAE’s real estate sector remains positive

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CORONAVIRUS IMPACT

Despite subdued growth levels over the first half of 2016, our outlook for the UAE’s real estate sector remains positive.

Against a backdrop of global and regional uncertainties, the real estate sector in the UAE witnessed sluggish growth during the first half of 2016. However Knight Frank’s outlook for the sector in the long-term remains positive on the back of the government’s commitment to infrastructure spending and development projects, stronger growth forecasts (IMF), and the UAE’s safe haven status making it a favourable destination to live in, invest and visit.

Commercial Market:
Growth in the commercial market (office and industrial) was muted in the first half of 2016, as corporates and industries continued to scale back expansion plans amid increasing economic uncertainties.

With the industrial and logistics sectors being a main pillar of Dubai’s non-oil economy, the sluggish performance of global trade market is likely to reflect on the performance of the industrial sector in the short-to-medium term. Consequently, rents are expected to remain stable as occupier demand softens. In Abu Dhabi, while demand has slowed significantly on the back of the decline in oil prices, the limited supply of quality industrial space is expected to keep the market stable.

In the long-term, the UAE’s commitment to diversifying its economy through continued investment in developing the sectors’ supporting infrastructure (e.g. Jebel Ali Port & KIZAD) and enhancing legislation is likely to boost the industry further.

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