End users to benefit from real estate crunch

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The survey, conducted on the eve of the upcoming R&R Local Property Show, Ajman - organized by DSL Exhibitions, and due to be held on the 6th, 7th and 8th of November at the Sheikh Zayed Center for Conferences and Exhibitions, Ajman University - also revealed that 47% of the respondents felt the UAE will remain an attractive destination for real estate investments over the long term.

'We wanted to understand the impact the global financial crisis is having on the opinion and mindset of UAE nationals and residents who either own property or are seriously considering it, in terms of demand for real estate,' said Tessa Morris, Marketing Director, DSL Exhibitions. 'All of us in the industry know that there is a downturn but how we manage it as an industry is the key to our success. The key to riding this crisis successfully lies in trying to understand what will sell in the next 18 months and who will be buying it.'

Commenting on how the industry is responding to these developments, Ahmed Chapal, Executive Director for Chapal, said:

'We are already in the hand-holding mode with our investors and home buyers through financial packaging, policy makers should look at how to speed up implementation of laws and regulations, so mortgages and home loans can be made readily available for buyers of freehold properties in Northern Emirates.'

Survey results:

Survey design:


• The survey targeted UAE nationals and those expatriates who have lived in the country for the last 3 years or more


• Sample size: 312


• The survey took into account the demographic makeup of UAE. With that in mind, the proportion of the respondents is as follows: Emirati Nationals 19%, other expats (Arab and Iranian) 23%, South Asian (Pakistani, Indian, Bangladeshi, Sri Lankan) 50%, other expatriates (includes Westerners and East Asians) 8%.


• Emirate-wise residence split of respondents: Dubai 34.5% / Abu Dhabi 30% / Sharjah 18.5% / Ajman 7% / Umm Al Quwain 0% / Ras Al Khaimah 7% / Fujairah 3%


• 28% of those polled already own property in the UAE, while 72% don't.

1. Are the present conditions in the UAE property market, the price correction that has been talked about in the past?

Yes: 87%

No: 9%

Don't know: 4%

An overwhelming majority of respondents recognize the present conditions as the correction everyone feared. As the global financial crisis dries up liquidity and years of profits from investors' portfolios, the market has gone into a bearish mode. While all things remain the same on the ground, in terms of UAE property, both small and big investors have shifted to a very cautionary stance, pulling out money from wherever they can and holding off buying any assets.

2. In your opinion, are end users of property likely to benefit from this downturn in the market as demand drops and supply increases?

Yes: 66%

No: 27%

Don't know: 7%

Surprisingly, two-thirds of those polled look at the current real estate market with optimism, agreeing that this will be good for the end user segment, who typically invest in property to live in it. Clearly, a fall in real estate prices is expected with more units falling to levels where a larger segment of the population

can afford it.

3. Do you think that prices in the UAE are too high or on par with the growth of the Emirate as the Middle East business hub?

Too high: 54%

On Par: 21%

Too low: 12%

Don't know: 13%

More than half of the respondents feel that property prices in the UAE are too high, even if the country has emerged as the business hub of the region - thanks to business friendly practices.

4. How can developers sustain demand in the present financial environment?

Lower prices: 23%

Offer more flexible payment options: 14%

Focus on more affordable units: 63%

One of the most revealing results of this survey - and one which developers would do well to listen to - is that a significant majority feels that the best way to fight the downturn is to offer more affordable units. A large number of projects are either still on paper or in the planning stage. Developers backing these projects should look at ways at offering what the market is clearly demanding - more affordable, middle-market units - especially in view of rising rents across the country. This strategy, combined with more flexible payment plans or rent-to-own schemes, can be expected to persuade a large number of fence-sitting buyers who are currently renting.

5. How will this correction impact the long term prospects of UAE as a property investment destination?

Positively: 47%

Negatively: 27%

Don't know: 26%

A cautious yet emphatic thumbs-up by the respondents to the UAE as a long term property investment destination, a clear indication that people continue to be positive about the country's financial outlook and its real estate market. Speaking on the issue of property being considered a safer option than other kinds of investments, Faisal Khilji, Marketing and Sales Manager for Chapal, said: 'Serious property investors are always looking at the long term benefits, including higher ROI and increasing rental returns, when making investment decisions. These factors, which few asset classes can offer, definitely boost the confidence and comfort level of real estate investors in terms of safety of investment.'

6. Given the current scenario, would you invest in property in the UAE during the next one year?

Yes: 21%

No: 76%

Don't know: 3%

While most buyers are in the sell mode, it is interesting to note that 21% of those polled feel they will be ready to invest in the UAE during the next one year - clearly indicating that people feel the market will adjust to the crisis and respond proactively to the downturn.

7. If you replied yes to the above question, which Emirate would be your first choice for a property investment in the present environment?

Abu Dhabi: 35%

Dubai: 26%

Ajman: 18%

RAK: 6%

Sharjah: 11%

Umm Al Quwain: 1%

Fujairah: 3%

For the first time, Abu Dhabi has emerged as the most attractive destination for property investment, whereas Ajman has come in as a strong third place contender.

8. Will you be exploring property investment options outside of the UAE, given the global downturn offers a good opportunity for those with liquidity?

Yes: 27%

No: 61%

Don't know: 12%

The above results unequivocally demonstrate that a large majority of people do not wish to invest in property anywhere in the world - at least for now. There is a strong sense in the market that prices of real estate across the world will go down a lot further from where they are today in the immediate wake of the financial crisis.