Saturday, Feb 01, 2014
Type : Article   |  Source : Arabian Business

The UAE's commercial real estate market is leading the way amid a global recovery on the back of an improving macro climate, according to the latest RICS Global Commercial Property Market Monitor.

Positive indicators for growth are increasingly evident across the global real estate sector with results pointing to a slightly faster improvement in retail real estate compared with office and industrial. 

Royal Institute of Chartered Surveyors said that at the forefront of these trends are the UAE and Japanese real estate markets where the Occupier Sentiment Index (OSI) and the Investment Sentiment Index (ISI) are firmly entrenched in positive territory. 

Significantly, twelve month forward expectations for rents and capital values in both countries are turning progressively upbeat reflecting the expectation that the economic recovery, now underway will continue to gather pace, it added.

The Occupier Sentiment Index now stands at 46 for the UAE, the highest reading since 2008, and also marks four consecutive quarters of improvement.

It said availability is still expanding, but at a diminishing pace, meaning demand is comfortably outstripping supply.

As a result, it forecast that rents are anticipated to increase further in the coming three months, with the headline balance nearing the best level since 2008.

Inducements to take leases fell for the first time in five years, another indication of an improving market environment, the index added.

The Investment Sentiment Index for the UAE increased to its highest level on record at 53, with inquiries up across each sector with office and retail the strongest performers.

Survey respondents projected an improved number of investment transactions in the next three month period while the supply of distressed property continues to fall.

Other markets posting a firmer trend in both occupier and investor sentiment included the US, New Zealand, South Africa, Russia and China, RICS said.

RICS chief economist, Simon Rubinsohn, said: “The improving tone to the global economy is not without its challenges but the lessening of downside risk is, more than anything, helping to support commercial real estate markets.

"The recovery in sentiment in Japan and the UAE continues to gain momentum but the more positive mindset is spreading. A key issue is how the tapering of the US Federal Reserve’s quantitative easing programme plays out.

"Our suspicion is that the more solid macro support in much of the world will help underpin markets but it would be foolish not to anticipate some volatility as monetary policy becomes somewhat less accommodating.”

Author : By Andy Sambidge -