Jones Lang LaSalle reveals 'Top 8 for 2008': Predictions for the GCC real estate sector

Jones Lang LaSalle is a pre-eminent name in the global real estate industry with 160 offices worldwide and has worked in 25 countries in the MENA region on projects worth $150bn and on transactions in excess of $1.2bn.

Alastair Hughes, EMEA CEO, Jones Lang LaSalle and Blair Hagkull, Managing Director of Jones Lang LaSalle MENA made the following predictions for the Gulf real estate sector:

• Redevelopment of GCC Cities To Increase Competitive Environment

"The freehold revolution started in Dubai in 2000 had a distinct timing advantage and presaged the phenomenal development of the real estate market throughout the region but, for the first time, we are now seeing the redevelopment of cities in the GCC alongside the vast amounts of 'Greenfield' or new city development." says Blair Hagkull.

"Greenfield freehold development created the market and had a distinct timing advantage, which it will maintain for years, but projects that fall under the banner of urban regeneration will hold the location advantage as they will, in essence, see the redevelopment of urban central business districts in all key cities of the GCC."

• GCC Hotel Occupancy & Rates Will Continue to Rise

Jones Lang LaSalle, has a market leading position as advisers in the hotel and leisure sector. Its predictions for hotel performance in 2008 remain positive.

"Dubai has amongst the highest rates and occupancy in the world. We see no change to this, indeed, we see other GCC markets outperforming Western markets in this key sector. That said, cities such as Abu Dhabi and Jeddah will develop strongly," says Hagkull.

• GCC Investment in International Real Estate To Grow by c50%

In light of the current credit crisis coupled with record oil prices, oil rich GCC countries will continue their aggressive international investment activities. We can also expect to see more landmark transactions closed with the total value of capital exports from the GCC to increase by as much as 50% in the coming year after last year's record growth

• Dubai To Reach Global Standards in Transparency

In 2004 Jones Lang LaSalle's Biennial Transparency Index identified Dubai and KSA as amongst the poorest regulated markets globally in 2004, according to the Index this placed the Gulf states in the fifth and bottom tier globally. By 2006, Dubai had improved to enter the 4th tier, and in 2008 we can expect to see Dubai in the 3rd tier and moving close to the 2nd tier countries of Belgium, Switzerland and Germany. The rate of change in Dubai is unprecedented and Jones Lang LaSalle expects to see this development in other GCC states in the coming year.

• Global Real Estate Investors To Enter GCC Market

"2008 will be the year that the world discovers the global importance of GCC investors and the world discovers GCC real estate." Says Blair Hagkull, Managing Director of Jones Lang LaSalle MENA

"Several factors will contribute to this: Greater transparency and the resulting decrease in risk perception, the ongoing fall out of the global sub-prime crisis along with improved quality, and greater access to local debt markets will all contribute to the arrival of international investment in GCC real estate markets," says Blair Hagkull, Managing Director of Jones Lang LaSalle MENA.

Of the Eight predictions Jones Lang LaSalle made; the following three were highlighted as the most significant:

• GCC To Become Global Leader in Sustainability

"Sustainability has become an issue of global significance and, as one would expect, His Highness Sheikh Mohammed, has responded by insisting Dubai contributes to this essential issue. Legislation in Dubai is bound to follow and the region will look to follow Dubai's lead," says Blair Hagkull, "However, we believe that the UAE can lead the world on this issue where, free from the legacy of decades of un-environmental development, a framework for sustainability can be conceived and implemented that leads and surpasses global best practice."

• "Flight to Quality" Creates Two Tier Market

"When demand outstrips supply, people will buy what is available. When there is a choice, quality counts. We see 2008 as the year when a 'flight to quality' occurs in all sectors of the market. By 'quality' we do not necessarily mean, 'luxury', but it does mean quality of location and position, quality of brand, quality of finish, and quality of service.

• GCC Property Prices and Rents to Continue to Rise

'We see continued growth in property and rental prices,' says Blair Hagkull. 'Pent up demand, increasing costs and delivery delays will contribute to price rises of between 10 and 20% in the most established markets of the UAE and elsewhere in the region we see even greater potential. Most notably, Dubai now has some of the most expensive real estate in the world. In 2008 we expect to see rents at the Dubai International Financial Centre, for example, being second only to the West End of London.

Conclusion
Jones Lang LaSalle's 'Top 8 for 2008' demonstrates that the coming years will maintain the incredible momentum that the development of the Dubai freehold market created in 2003. What is perhaps most interesting is that global issues such as sustainability, transparency and quality will increasingly characterise the regional sector as its role within the global market crystallises. We fully expect to see the GCC real estate market continue to mature, develop and grow.