2014 Top Real Estate Trends for UAE

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The property market in the United Arab Emirates appears to be in fast recovery, with prices in Dubai growing by as much as 20 to 30 percent in 2013. While this has led to concerns of a returning bubble, Jones Lang LaSalle says the market is "smarter and more measured this time around" in its latest annual report for the UAE real estate market. 

"This is reflected in a degree of healthy caution among both investors and occupiers," Alan Robertson, CEO, JJL MENA, said in the report. "We believe that 2014 will be a relatively positive year for the UAE real estate industry, with most sectors of the market experiencing improved performance."

Here is a highlight of JJL's top 2014 trends for the UAE real estate market.  

Although prices have increased and the market is witnessing the return of speculative activity, JLL notes the market is different now, as investors are more cautious, regulations are better and property development are being phased in line with demand. There is also less reliance on pre-sales and sub-developers. 

Mega projects are back as confidence grows in the UAE's market. In Dubai, master-plan communities include Dubai Canal, Mohammad Bin Rashid and Dubai Waterfront. In Abu Dhabi, they include Saadiyat Island and Capital District, now known as Zayed City. 

Contrary to previous years, bank debt will not be the favored form of financing as it was during the last boom. This time around, equity will be the preferred funding approach in 2014. "Sale and leasebacks, REITs and IPO's and last mile financing will become increasingly popular options for funding as banks remain cautious to enter into new relationships," JLL said.

Investments in the UAE's hotel sector is expected to increase, as owners now have more realistic expectations and hotels continue their strong performances. 

Strong investment in the market remains from local and regional investors. Western institutional investors have been absent from the market and it is likely to stay that way as they place higher emphasis on secure income and are more risk averse. 

Winning the Expo 2020 gave a boost to the market, but it is not forecast to have a major impact in 2014, according to JLL. However, it is expected to be a long-term driver for the hospitality, logistics and retail sectors.