Dubai is still a key location for property investment despite the ongoing political crisis in the region.
According to the National Commercial Bank (NCB), a top Saudi financial institution, demand in some segments is increasing, but the outlook remains cautious due to the global economic slowdown.
In a report, the NCB said Dubai remains the epicentre of the regional real estate story, but is struggling to digest a large oversupply of up to 15,000 new units due to come onstream by end-2011.
"Nonetheless, demand in some segments is clearly now recovering, further helped along by perceptions of Dubai as a relative safe haven after a period of political turmoil in parts of the Middle East," said the bank.
It added that, "Even as much of the Dubai real estate sector remains soft, select market segments have begun to see actual price growth…the overall price and rental declines are now in the low single digits. Apart from prime residential property, the demand for high quality office space is increasing."
However, the report made clear that the outlook for Dubai and the rest of the region remains both uncertain and mixed.
“Renewed global weakness will almost certainly delay the stabilisation of these markets and even the prospect of further price corrections cannot be ruled out. The limited availability of mortgage finance in many markets will contain residential demand….but beyond this, it is increasingly obvious that any recovery will likely prove fairly uneven virtually across the region."
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