Knight Frank maintains positive outlook for UAE real estate sector

The real estate sector in the United Arab Emirates (UAE) saw softer growth during the first half of 2016, but the overall outlook for the industry remains positive, global real estate consultancy Knight Frank said in its latest report.

The agency based its outlook on the government’s commitment to spending on infrastructure projects and stronger growth forecasts.

The residential market in Dubai maintained its stability in the year-to-April 2016, with the prime market continuing to outperform the market average, the report said.

Prices in the prime segment increased 2 percent on a quarterly basis between fourth quarter last year and Q1-2016.

In Abu Dhabi, sale prices were stable due to a shortage in residential supply.

“The residential market in the UAE is expected to soften over the second half of the year. While it’s difficult to predict when the next growth cycle will be, we expect the residential market to level out by the end of 2016 before seeing gradual recovery in 2017,” the agency added.

Growth in the commercial market (office and industrial) in the UAE was subdued in the first half of 2016, as corporates and industries scaled back expansion plans, according to the report.

However, the UAE’s commitment to diversifying its economy and enhancing legislation is likely to boost the industry further.

The retail market in Dubai and Abu Dhabi is expected to see slower growth levels over the second half of the year, the agency said, noting “economic uncertainty and unfavorable currency exchange rates” that are likely to impact tourist and domestic spending.

“In the long-term and as global uncertainties begin to ease and confidence in the market picks-up, we expect to witness another growth cycle for the retail market associated with growth in the hospitality and tourism industry,” the report said.