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Gloomy real estate reports about the Gulf region putting off international property investors

Despite some early signs of growth in stabilisation, global investors are exploring options but are still not coming up with the cash as they feel there will be a further correction in the market in 2010 due to a number of recent gloomy predictions.

‘I think international investors believe there are good investment opportunities in Dubai, for example, but that has not yet resulted in any significant investment inflow.

Property investors need positive returns on their investments, and with property markets currently oversupplied in most sectors that will be difficult to achieve,’ said JP Grobbelaar, Director, Research and Advisory at Colliers International.

‘Colliers holds the view the recession is still very much with us and will remain so until there is a positive GDP growth in the non-oil sectors of the economy.

Once economic results do indicate positive economic growth, we must be mindful that there will still be a long road to full recovery,’ he added.

Indeed the Central Bank has indicated that the real estate industry in the United Arab Emirates will take some time yet to recover.

‘The recovery will be determined not only by internal issues but by regional issues as well.

Also the pattern of recovery will be different in various parts,’ said Sultan Nasser Al Suwaidi, Central Bank Governor.

He added that excess supply was one of the main factors hindering recovery but he is confident it will be absorbed eventually.

Porush Jhunjhunwala, Commercial Leasing Manager at Better Homes, believes that the recent positive upturn in the market has led to a renewed interest but that is not translating into transactions

‘The confidence of global investors is too low at the moment as they feel there could be a further correction in the market in the first quarter of 2010.

Having said that, there are investors who are exploring the market but not transacting,’ he explained.

Recent gloomy reports have not helped.

Property trade in Kuwait is predicted to fall by 40% this year compared to last year, according to the latest economic outlook from Alshall and a report from Swiss Bank UBS says that property prices in Dubai could drop another 30% over the next 18 months and may take at least 10 years to recover to peak levels.