United Arab Emirates Real Estate Report 2016
BMI View: Despite external pressures, demand in the commercial real estate industry is rising.
Premium units in the office and retail sub-sectors are witnessing further investor interest; whilst expansion plans in industrial real estate could see rentals rise.
We therefore hold optimism for commercial sector growth over 2016, although advice vigilance in light of falling oil prices that will stretch the economy.
The United Arab Emirates holds economic strength through prominent sovereign wealth and further diversification from oil related sectors into contemporary industries over the past few years, more so than the neighbouring Gulf states, with over 40% of GDP contribution coming form services.
This indicates resilience to debilitating effects from the global economic cool down, a result of the fiscal struggles in China (a major trade partner) that has undoubtedly led the Arab nation to adopt more stringent economic policies.
Additionally, foreign investor ownership has grown, revealing a more tolerant UAE in which domestic players have previously dominated the market.
We opine that commercial real estate should see stability in rentals across the board, with marginal rental rise in premium units for office and retail, as a result of the growing demand, limited supply and inconsistent pipeline.
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