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A new report predicts a further leg down to the UAE property market before prices and rents recover.
The report by Arquaam Capital Ltd. states that genuine revival triggers will only appear in a broad macroeconomic recovery, via job creation , a rise in discretionary spending, continued regulatory evolution, resumed mortgage lending and growth in tourist flows (both within and to the MENA region).
Qatar, the gas rich Emirate is to some extent slowly losing its promise as a growth driver in the contracting sector, the report says.
Industry players indicated concerns that contracts are being selectively awarded to foreign contractors over regional names. The main reasons cited are build quality and contractor solvency, which boded poorly for regional hopefuls looking for backlog and margin relief.
The document concluded that Abu Dhabi was “fast becoming” the worst construction market in the GCC after Dubai. Cut throat price competition and a scale-down in government plans by 30 per cent during the year were seen as among the main causes and the recent withdrawal of the Guggenheim Abu Dhabi tender was given as an example.
The report pointed out strongly that despite some sparse evidence that secondary market residential and rental rates had stabilised in H1 of 2011, incoming capacity (plus 17 per cent and plus 32 per cent in Dubai and Abu Dhabi respectively) remained substantial, even when adjusted for project cancellations and delays (which according to the report’s estimates constituted 50-60 per cent of 2005’s planned deliveries).