Balfour Beatty, UK’s biggest building firm, decided to sell its operations to a local firm for $13.7 million as reported by GULFNEWS Property at a time when Dubai property investors are advised to not be in any rush to sell their assets right now because they might end up making much less than anticipated. Was Balfour Beatty’s decision to leave the UAE due to the presently moribund state of the country’s construction market? Or is it just another epidermic, overreaction of theirs to an environment of lower earnings combined with an already overbuilt environment that is taking longer than thought to come out of the current trough. Then why Balfour Beatty’s leaving the UAE ? We all know that builders are quick to react to the demands of a market; but is it the same for real estate agents?
Indeed, property market feedback is suggesting that few property sellers as well are affected the same way in the current environment and have had to face similar disappointment. And this is true for both existing properties and those nearing completion, especially those set in such special locations as that of Dubai Marina and Jumeirah Lake Towers.
This is for properties that were bought between 2013 and mid-2014, when property sale values were at their peak. Buyers who got in at that time and are now selling might find themselves in such an unprecedented situation that they could have difficulty figure a way out. It seems the same for those who acquired property back in 2007 and 2008.
We must not forget that rents in Dubai surged drastically in 2013 and early 2014, making it unaffordable for several residents. However, governmental measures introduced around a year ago have helped the overall property market stabilise, with prices also remaining steady in the last two quarters.
We have noticed in May 2015, per Cluttons’ latest report at the time, that the average rents across the emirate were down 1.5 per cent compared to the same time a year earlier. Dubai’s property market was seeing an increase in supply. Over 12,600 units were expected to come to the market by the end of 2016 and a further 15,800 completions scheduled between 2017 and 2018.
Property owners are increasingly wary of the threat of longer periods of the lull in property markets across the GCCs, which may trigger a transfer of their operations towards the informal sphere deals, where landlords and tenants agree rents that are not conforming to the Dubai Government’s Real Estate Regulatory Agency recommendations, the report said.
Meanwhile Amna Pervaiz Rao of The Peninsula sees growing competition in Doha, Qatar market to the point where it is causing a slow but steady fall in rents of accommodation as induced by the shrinking oil price related state revenues that are more and more impacting the whole of the country’s economy. These state’s revenues prior to June 2014, had required the construction of new housing complexes for their increasing demand for accommodation of their surging employment, are leading real estate agencies to currently reduce rents by an average of 15 to 20%.