Emirate sees stronger economic growth and more conservative spending
"The good news is that even if the global economy shows a tendency to apply the brakes,
The IMF predicted in a recent report that
In 2014-second quarter, residential sales prices and rents were still on the rise, but the rate of growth slowed dramatically for both sale prices and lease rates, leading to yield compression, Phidar Advisory report said.
Thee report states that as many as 30,000 additional units are needed in
Thee report said that nominal prices for single family homes declined four per cent and apartments declined 0.6 per cent according to transaction data for the first six weeks of 2014 third quarter.
Phidar's House Price Index reflects real prices adjusted in representative projects across
"Residential development opportunities are still ample in
Phidar said that over this period another 15,000 units could be reactivated from stalled projects thereby creating a viable supply gap of as much as 20,000 units.
"While there are indications that transaction volumes are declining, the slack in the information in this sector makes it difficult to obtain a precise figure. All too often off-plan sales are not factored in because they are not reported consistently. Processing lags and inconsistent reporting create similar challenges to collecting and analysing real estate mortgage data," the report said.
The report observed that after the
Phidar said individual properties in
Net yields have compressed and that it could be a step too far, it said. Market transparency appears to be regressing and that could increase the risk profile. Since speculation pays a major role in this market the property sector will continue to display volatility. "In the short term, this will likely lead to a price correction, following a two-year period of exuberant investor sentiment."
Asiya Investments is also of the view that
Phidar report also suggests that long term capital appreciation due to strong demographics is a foreseeable scenario but the current supply trends and affordability constraints will pose challenges to sustained long-term growth.
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