1: Bursting bubbles: With unsustainable price growth in the residential market, increasing cost pressures and the return of speculative activity, there has been concern that Dubai will experience another bubble. However, Jones Lang LaSalle notes that there are many differences this time around that make for a smarter market, including more cautious investors and better regulations.
2: Measured development: Mega projects that were either put on hold, significantly slowed or not initiated during the financial crisis are a reality again because of growing confidence in the UAE market. Plans are more measured with increased focus on phasing projects over many years in line with demand. In Dubai, these master plan communities include Dubai Canal, Mohammad Bin Rashid City and Dubai Waterfront. In Abu Dhabi, they include Saadiyat Island and Capital District, now known as Zayed City.
3: Growing south: Dubai is growing towards the south with Dubai World Central, which includes the Expo 2020 site, and Al Maktoum International Airport driving this trend. There is also a notable trend towards development closer to central Dubai, infilling some of the gaps left by the previous scattered development. Mohammad Bin Rashid City is a good example of this, incorporating many of the components originally envisaged for Dubailand. Abu Dhabi is also following a policy of concentrating development in a number of strategic locations identified in the city’s Economic Vision 2030.
4: Expo factor: Jones Lang LaSalle expects that there will be limited direct impact resulting from Expo 2020 in 2014 because there will only be limited activity this year. Over the long term, Expo 2020 will have a positive impact on the UAE with hospitality, logistics and retail being the major winners. Both price expectations and excessive new supply will require careful management leading up to 2020.
5: Varied funding approach: Jones Lang LaSalle expects that equity will be a preferred funding approach in 2014. Pre-sales will remain important in the residential market while pre-leases and build-to-suit developments will fund many new office projects. Sale and leasebacks, Reits and Initial Public Offerings, and last mile financing will become increasingly popular options for funding as banks remain cautious to enter into new relationships.
6: Hotel investment: Across the UAE, Jones Lang LaSalle expects more investment sales in the hotel sector than have been experienced in recent years as owners now have more realistic expectations and hotels continue to perform strongly.
— GN Focus Report
