Confidence returning to the UAE says Chesterton
25 January 2010
Chesterton, the international property agency established in 1805, believes confidence has returned to the UAE based on several economic indicators. The UAE Dirham has fluctuated between 5.5 and 6 to the Great Britain Sterling Pound, another key indicator is that the Brent Crude Oil Price (US$ per barrel) has seen a steady rise since May 2009 and has almost doubled in price.
“Undoubtedly, the UAE duo of Abu Dhabi and Dubai leads in the PGCC and Middle East and North Africa (MENA) region. As Dubai learns to be more cautious with financial support from its two tranches of bonds of US$20 billion, there is every reason for it to make a strong comeback. The UAE duo recharged, reformed and combined will make them natural exemplary champions for the rest of GCC,” said Salah Mussa, Chairman, Chesterton International LLC commented.
“While the rest of the world needs time to recoup saving and wealth, the UAE duo suffers no real loss which cannot be rebuilt in shorter timeframe.
In its own way, be it petrodollar recycling or helping global rebalancing, the UAE’s surplus balance-of-payments can afford spending on investment and consumption. Its absorptive capacity may not be as big as billion-populated China and India, but GDP per capita in Abu Dhabi in particular, is among the world’s highest (US$71,200 in 2007),” added Mr. Mussa.
“Several investment funds, specializing in buying distressed developments, are starting to move into the market. This is usually the first signs of recovery for a maturing property market and we believe that the bottom of the market is close to materializing. Dubai is on its way out of the property slump and this is due to a rise in confidence within the consumer and financial sector in addition to a surge in transaction volumes. We have mentioned earlier this year that despite the current economic challenges facing the worldwide property market, Dubai is forecast to grow at a rate of 4-6% per year until 2015,” said Mr. Robin Teh, Director, Valuations & Research, Chesterton International LLC.
“There has been a noticeable change in the property market where property prices appear to have stabilized. This has not been through the calming of the global economy, but the key fundamental characteristics of the Abu Dhabi market. The population of Abu Dhabi still has a need for housing regardless of global climates and with high rental levels remaining, owner occupation is the alternative. The main factor which to some extent is retarding a stronger level of price increase or market activity is the cost of finance. Whilst remaining at above 7% per annum, interest rates are continuing to favor the lenders rather than the borrowers. Movement has already been put in place to alter this and encourage the lowering of lending rates in line with other key financial indicators such as EIBOR and inflation,” added Mr.Teh.
Many of these countries are showing signs of reaching the bottom of the economic cycle, with some anticipating growth for 2010. Many analysts are starting to believe that the duo growth engine of China and India will be able to steamroll the rest of the global economy out of recession next year. In China and South Korea, the governments are already planning new policies to curb excessive unsustainable growth of the economy.
Across Europe many of the economies are already looking forward to a stronger than anticipated 2010, whilst fiscal policies are brought in line with global and regional trade. Financial markets at present appear to have stabilized, with both the FTSE and the New York Stock Exchange making positive progress in 2009.
With a network of 60 offices across the UK and international offices in the EU and Australasia, Chesterton is looking to establish a strong footprint in the Middle East and Asia, combining its long-standing global industry knowledge and the in-depth expertise of its local staff.
(Source: zawya.co)