The stock market of Abu Dhabi is facing a continuous slowdown , hardly a boom indicator for local real estate investors one perhaps thinks, but still that is not the case. Stock market slowdowns can actually be good for real estate investment.
If we Take the 2006 UAE stock market crash and Dubai property boom as an example we find the above mentioned statement really true. When local stocks came down many believed the end of the Dubai real estate boom was on the cards. But what happened was just the opposite. Investor pulled money out of stocks and bought property, and even those who may have put their money into stocks decided to buy real estate. As a result Dubai property prices have more than doubled since the 2006 stock market crash.
Will we see the same happen in Abu Dhabi? To me it seem very much possible.
Dubai Case Study
One really needs to look at the 2006 occurrence in Dubai for an answer to that question. Besides the supply and demand position in Abu Dhabi for completed property, which underpins the off-plan market, is extremely strong.
Last week's report from a renowned property consultant showed that rents continued to surge in the UAE capital in the third quarter with increases of up to 36%. The average cost of renting a home in Abu Dhabi is now on a par with central areas of London and New York.The report said that Gulf region offers strong relative international value with 8%-8.5% yields for prime commercial property. On an annualized basis, Abu Dhabi residential rentals jumped an amazing 87%
Residential property investors in the UAE capital have also enjoyed a near doubling-up of capital values. The problem of course is that off-plan buyers will have to wait for their properties to be delivered to benefit from the high rents, either as landlords or end-users saving on their annual housing costs.
The present situation in UAE stocks is not far removed from this phenomenon. But where do investors put their money locally if they abandon stocks? Abu Dhabi real estate will likely be a major beneficiary.
If we Take the 2006 UAE stock market crash and Dubai property boom as an example we find the above mentioned statement really true. When local stocks came down many believed the end of the Dubai real estate boom was on the cards. But what happened was just the opposite. Investor pulled money out of stocks and bought property, and even those who may have put their money into stocks decided to buy real estate. As a result Dubai property prices have more than doubled since the 2006 stock market crash.
Will we see the same happen in Abu Dhabi? To me it seem very much possible.
Dubai Case Study
One really needs to look at the 2006 occurrence in Dubai for an answer to that question. Besides the supply and demand position in Abu Dhabi for completed property, which underpins the off-plan market, is extremely strong.
Last week's report from a renowned property consultant showed that rents continued to surge in the UAE capital in the third quarter with increases of up to 36%. The average cost of renting a home in Abu Dhabi is now on a par with central areas of London and New York.The report said that Gulf region offers strong relative international value with 8%-8.5% yields for prime commercial property. On an annualized basis, Abu Dhabi residential rentals jumped an amazing 87%
Residential property investors in the UAE capital have also enjoyed a near doubling-up of capital values. The problem of course is that off-plan buyers will have to wait for their properties to be delivered to benefit from the high rents, either as landlords or end-users saving on their annual housing costs.
The present situation in UAE stocks is not far removed from this phenomenon. But where do investors put their money locally if they abandon stocks? Abu Dhabi real estate will likely be a major beneficiary.
1 comment:
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