Jones Lang LaSalle (JLL) has claimed that Dubai's real estate sector is set to witness some stability in capital values over the coming 12 months. The firm noted that Abu Dhabi will see highest value declines over the period.
"While Dubai is already passed the supply peak, Abu Dhabi is still approaching the peak of the supply cycle. Thus, Abu Dhabi rents and sale prices are expected to continue to decline in the coming year," JLL said in its 2011 Middle East and North Africa (Mena) Real Estate Investor Sentiment survey.
According to the survey, more established residential and commercial areas have experienced price stabilisation and, in select cases, increases. Areas such as Palm Jumeirah, Dubai Marina and prime office locations like Dubai International Financial Centre and Emaar Square have performed best while less developed areas with limited infrastructure continue to suffer.
Meanwhile, investment in the region is also expected to rise, with around 75 per cent of respondents planning to increase their level of investment in the Mena real estate market over the next 12 months.
Respondents aim to invest up to USD 6 billion in the real estate market over the next year. JLL warned that this may be inflated because many funds may be trying to tap the same capital sources.
Some 74 per cent of investors added that they had the funding in place to finance their plans for the next 12 months, with the remaining 26 per cent planning to use a combination of debt financing and syndicated equity to raise the required capital.
The office sector was found to be the one driving demand, with investor interest more focussed on completed and operational properties backed by long-term secure income streams. Mena-based investors also expressed interested in the residential sector, JLL added.