The recently launched initiatives by the UAE government are likely to boost the real estate market within the state over the coming months, according to JLL’s UAE Market report for the second quarter of 2019.
The new initiatives aim to encourage foreigners to invest in the country’s real estate market and boost their confidence in the sector, the report said.
The UAE government has launched a number of initiatives in Q2-19, including the freehold law and the permanent residence system called ‘Golden Card’, in order to support the overall economy and drive markets demand.
Dana Salbak, research associate at JLL MENA, said: “Overall market sentiment should improve in the long run with the announcement of stimuli such as the new visa regulations. While the benefits of these initiatives are not likely to have an immediate impact, we do expect some sectors of the real estate industry to pick up in the run up to 2020,”
“While the residential sector in, both, Abu Dhabi and Dubai witnessed subdued performance overall, new initiatives to drive expat home ownership will likely boost demand. The office sector, too, will witness potential upside from these new initiatives launched to stimulate the economy,” she added.
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Abu Dhabi’s office sector saw a downturn in Q2-19, with rentals for both Grade A and Grade B space contracting, JLL said.
The report also indicated that global corporates are now paying attention to occupancy metrics to improve employee productivity by eliminating wasted space, which slightly pushed up demand for smaller sized units.
Moreover, the report highlighted the major role of the government’s Hub71 as part of its economic stimulus package in bolstering technology start-ups, as well as the real estate sector.
Meanwhile, Dubai‘s office market softened in Q2-19, with demand for co-working space remaining flat, JLL noted.
The office sector within Dubai is expected to accelerate over the coming years despite it currently accounts for less than 1% of all office space, the report remarked.
As for the retail sector, it remains the most challenging sector in the UAE due to ongoing increased supply and low consumer spending, with mall owners investing in new technologies to extend retail sales and presence.
“In recognition of the growth of e-commerce, the announcement of digitally-enabled malls like Dubai’s ‘Mall.Global’ are expected to drive the market in the months ahead,” the report added.
Furthermore, the hotel sector in Abu Dhabi has recorded a 12% growth in average daily rate (ADR) in the year to Mayas compared with the year-ago period, becoming the “standout performer” in Q2-19.
JJL also said that government initiatives such as the visa fees exemption for children under 18 and free SIM cards for tourists on arrival are likely to support the tourism sector in the UAE overall.