A retail boom in the UAE is expected to help to push up average commercial rents across the country for the first time since mid-2008 and to restart stalled schemes, a new study has found.
According to the British-based Royal Institution of Chartered Surveyors, for the first time in nearly five years, more chartered surveyors are predicting that rents for shops, offices and warehouses will increase this spring than those who think they will stay the same or fall.
"Business activity generally seems to be increasing which will no doubt show positive influence on the real estate market over the coming months," said Elaine Jones, the Royal Institution of Chartered Surveyors' UAE spokeswoman. "Investor interest in buildings is greater now than six months ago."
The results of the survey, which was conducted among 711 industry professionals worldwide, found that about 10 per cent more chartered surveyors expect average commercial rents in the Emirates to increase in the second quarter of the year than those who expect them to fall. When the same survey was conducted in November, 5 per cent more surveyors expected UAE rents to fall.
Surveyors also predicted that an increase in demand would prompt developers to start work on new schemes with 30 per cent more surveyors predicting development starts over the next three months than those who said work would stop - a big jump from the previous quarter when the net balance stood at just 10 per cent.
The surveyors' prediction for rent increases in the UAE was the tenth most positive in the world with the highest proportion of surveyors predicting rent increases (about 45 per cent) in Thailand and the highest proportion of surveyors predicting rent falls (about 60 per cent) in Italy.
Anticipated development starts in the UAE was the sixth most positive in the world, ranking behind China, Singapore, Canada, South Africa and Brazil.
About 80 per cent more surveyors questioned said they thought demand from occupiers in the UAE would increase over the coming three months than those who thought it would fall.
Surveyors predicted that overall capital values for commercial property would remain static over the coming quarter - a significant fall from the previous quarter when 20 per cent more surveyors had mistakenly predicted capital values for commercial property would increase. Most expected property values for shops would increase slightly while those for offices and warehouses are likely to fall.
The report's authors suggested this was partly due to the acceleration in new development starts bringing new stock to the market. They also blamed the rising number of distressed office and industrial properties coming to the market.