Dubai Property Market to Stabilise by Year-end

The Dubai property market is likely to start stabilising before the end of the year, but property prices will remain flat in the next two to three years as demand will still take time to pick up pace even after the economy recovers, said an executive of Reef Real Estate Investment LLC.

The global financial crisis which took a turn for the worse last year, has abruptly curbed UAE’s booming property market, especially in Dubai, where property prices have fallen from their peak levels in late 2008. Prices are still falling, but at a slower pace compared to the first and second quarters.

“Prices in both the residential and office segments have gone back to their levels five years ago, but that is not necessarily bad because it is making Dubai more competitive,” said Ahmed Mohammed Zaed Saqer Al Nahya, chairman of Dubai-based developer Reef Real Estate Invesmtent LLC, at yesterday’s launch of R-Serviced Offices, a new unit set by the developer which offers full range serviced offices.

Al Nahyan said property prices are beginning to bottom out, and are not expected to fall further in 2010.

“The property market is going through a downcycle right now, it has absorbed the changes, but recovery will happen as landowners and developers are now less willing to offer distressed prices.” He said Reef Real Estate which launched this month its first R-Serviced Offices at the Al Reef Tower at the Jumeriah Lakes Towers in the Dubai Multi Commodities Freezone, has been quick to adopt to the downturn and had slashed its monthly rental offers to Dh9,000 from Dh15,000, the average industry rate for serviced offices prior to the crisis.

Al Nahyan said the prospects are getting better for a recovery in the office space market, especially developers that offer serviced offices.

The fully-furnished offices range from 12.3 sq m to 41.04 sq m in size and includes private guest reception areas and 12 meeting rooms.

A highly professional and internationally experienced team is at hand to support resident companies. “The crisis has actually spurred a stronger demand for serviced offices. Companies that are downsizing, including start-up companies are looking for smaller spaces but with all the cutting-edge office infrastructure without the attendant future liabilities from long-term leases.”

The company’s R-serviced offices at Al Reef Tower occupies four floors and can accommodate 200 offices. Al Nahyan said since opening this month, the serviced offices already have a 40 per cent occupancy, and the company is still in negotiations with other companies. “I am very ubpeat about this market. Our goal was to have a 100 per cent occupancy by the first quarter of 2010, but we think we can achieve this before the end of the year.”

The company will also set up similar serviced offices in the business district at Business Bay, where Reef Real will open next month its 20-storey Dh500 million Crystal hotel and office towers, and in Abu Dhabi by year’s end, said 
Al Nahyan.

Ian Lloyd, CEO of R-Serviced Offices said that in the next two years, the company will open up the business for franchising.

“The brand and the concept is strong and we think we can compete with the major companies in the serviced offices businesses like Regus and Servecore.”

Lloyd said the serviced offices is a viable option for companies today as they look to reduce costs.

“It is a protracted and expensive process to search for office space, negotiate a lease agreement, purchase the office equipment and hire the high trained support staff. With us, companies can avoid excessive upfront expenses of opening an office. Companies are not tied to long leases and do not incur service charges.”

Source: Khaleej Times