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Industrial real estate strong despite housing market

by Jon Cuthbert on Sep 21, 2011

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The impending oversupply of residential apartments flooding onto the Dubai market has been well documented since the global financial crisis struck back in 2008.

And now a glut of new skyscrapers are about to be released on the market, sparking fears over Dubai’s fragile residential property market.

In a sign of the times, landlords in International City on Dubai’s outskirts are offering discounts on deposits, rent-free months and added extras in a bid to defeat the summer lull that has sent tenancy enquiries into decline, Arabian Business reports.

Real estate consultants Landmark Advisory have stated in a Q3 report that oversupply in the Dubai real estate market won’t peak until 2012 – a worrying statistic for both legislators and landlords.

With rents expected to fall further, tenants are excitedly anticipating some bargains come negotiation time with their landlord.

But has the industrial real estate market fared any better?

According to Cluttons’ head of logistics in the Middle East, Will Wright, the market has performed strongly across the region despite the economic downturn of the previous few years.

“Even with a number of markets still coming out of the global recession, Industrial real estate has performed strongly across the Middle East region,” he said.

“In particular, we have noted that Abu Dhabi’s industrial market is proving to be robust, with specialist industrial property developments such as Al Markaz and KIZAD focusing on completing their first phase of their industrial and logistics development,” he added.

Looking to the future, Wright comments that the real estate sector will undergo a slight transformation.

“Towards 2012 there will be a push towards improvements in building quality, plus the trend in ownership structures moving towards corporate leases. In this sense, I see the investment market maturing over the coming months.”

But there are still some challenges ahead for the property market.

“Sponsorship requirements continue to be a challenge for us, as well as keeping updated on local employment regulations and how they are enforced. Many markets are still recovering from the recession and the logistics sector, although buoyant, still has room for advancement. In particular, I feel that we need to be vigilant in overcoming the impact that the economic recession has had on the real estate sector as a whole,” Wright said.


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