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UAE real estate market rebounding as stalled projects restart

Dubai: More than $12 billion (Dh44 billion) in previously stalled construction projects have resumed in the UAE over the past 18 months, according to MEED projects.

The resumption of stalled projects is another sign that the market is continuing to bounce back from the property market downturn in 2008.

“Confidence is returning to the market,” said Craig Plumb, Head of Research Middle East and North Africa at JLL.

“There are definitely a number of projects that are being recommenced. We are seeing some in Business Bay others in the Downtown area and also within the DIFC,” he said.

Between 2004 and 2007, Dubai expanded at a rapid pace with Dubai government related entities utilising cheap debt from local and regional lenders. But once the global financial crisis, property prices plummeted as much as 60 per cent.

Confidence in the UAE’s real estate sector began its resurrection last year but is seen to have been boosted last November when Dubai was successful in its bid to host Expo 2020.

“The pace at which stalled projects resumed construction activity has increased since Dubai won the right to host the Expo 2020, as positive sentiment returned to the UAE real estate market,” MEED Projects stated.

Market confidence can also be seen in the value of projects awarded last year. According to MEED Projects more than $23 billion in contracts were awarded in the construction sector, $1.8 billion in hospitality projects and more than $800 million in retail projects.

But many projects that had started before the downturn and were put on hold because they became infeasible are still unlikely to resume, Plumb said.

“The ones that are coming back tend to be more central locations … There were a lot of projects announced in more peripheral locations like Dubailand that still probably don’t justify recommencing,” Plumb said.

“There will be a lot that will never come back again,” he added.

In the commercial segment, Plumb said there is still a case of oversupply in office space, which means that many of the projects that are resuming will be more residential focused.