Busy time for UAE market
With developer Damac preparing a Dubai listing and Emaar's retail unit's massive IPO, the fourth quarter of this year is shaping up to be a busy period for local markets.
However, a bearish sentiment is building as investors raise concerns over high valuations currently offered by UAE equities. Fund managers plan to reduce their exposure to UAE markets, according to the latest Reuters survey of 15 leading investment managers. Only 7% intend to increase equity allocations there and 47% intend to decrease them as compared to ratios of 27% and 33% a month ago. The ratio of managers bullish towards the UAE is at its lowest point since last September.
Buyers in the market have also become more aware of increasing costs, taking a stand against growth in the luxury sector. Consultancy Knight Frank found that growth has slowed down when it comes to high-end homes. Market sources also affirm that new supply will reduce the scope for sharp mark-ups in prime properties.
“While there will always be investors interested only in trophy purchases in Dubai, the rest of the market is being driven by long-term buyers and end-users,” said the head of a brokerage firm. “Where they had few choices earlier — and those already had steep premiums attached to them — they now have the flexibility to choose from a wide selection of new projects and multiple property formats.”
While the market is undoubtedly going through a transitional period, Dubai remains a safe haven for people across the region looking to invest in property or to set up home. Industrial property especially seems to be in high demand. There also seems to be now slowing down when it comes to new projects. Nakheel recently announced its new community of 1,000 villas while Royal Estates is involved in a project that will create 2,000 homes at Dubai Investments.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With the many changes in store for the UAE's stock market, we are bound to see numbers bounce back to their original bullish track once things have settled down. With the Expo 2020 in the city's future, UAE developers are pushing forward full steam ahead with new projects that are bound to increase supply in the emirate. Most experts agree that with this, growth will continue to slow down - providing buyers with some relief from the ever-increasing prices. To follow-up on changes in property prices, be sure to read our coming issues.