Boston, MA -- (SBWIRE) -- 02/22/2013 -- The UAE Real Estate report examines the commercial office, retail, industrial and construction segments in the context of an increasingly positive macroeconomic climate, which may well see the tide turning on a market that has spent the last few years suffering from over-supply and the legacy of the property bubble.

With a focus on the three principal emirates of Dubai, Abu Dhabi and Sharjah, the report covers market performance in terms of rental rates and yields over the past 18 months. It also examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government-led growth on a market already characterised by oversupply and historically low rates. The key potential growth areas driven by increasing activity on the part of international investors and the potential of the domestic consumer market are also explored, with corporate growth strategies looking to the emirates for expansionary opportunities.

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Nevertheless, Saudi Arabia's various real estate sectors are developing in different directions and at varying rates. The commercial market in general suffers from oversupply and is forecast to undergo limited growth in the short term; however, BMI believes the market will reach its nadir over the course of 2012 and that positive sentiment growing around the sector (as evidenced by our data covering H112) will see its first few shoots rise above the surface, providing positive economic fundamentals remain on course.

Key Points:

- The UAE's reputation as a 'safe haven' in a volatile region will continue to serve the economy well, although growth will slow in 2012 as global headwinds pick up.
- Deleveraging will remain a prominent theme well into 2013, as corporates continue to focus on repairing their balance sheets. This will limit activity in the non-hydrocarbon economy.
- Abu Dhabi will outperform Dubai over the coming years given its large-scale investment plans targeting the infrastructure sector and ongoing concerns surrounding Dubai's lingering debt repayment schedule. A further tightening in international sanctions on Iran bodes poorly for Dubai's outlook given its trade linkages with the Islamic Republic.
- In line with our expectations, 2011 real construction industry growth came in at 3.2% (we had estimated 3.1%). Thus, we maintain our estimate of an unspectacular, yet healthy, 4.2% growth in 2012. We believe this outlook will be underpinned by ongoing, or re-started, projects rather than a stream of new construction contracts. Furthermore, we continue seeing investors increasingly seeking to capitalise on opportunities within the emirates' burgeoning tourism industry.

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