Landmark Advisory Q2 2010 Report: Affordability is the Key to Bolstering Corporate Interest and Creating Job Growth in the Emirates

Abu Dhabi, United Arab Emirates - April 19^th, 2010:

Today Landmark Advisory released its latest quarterly report, which focuses on the impact of upcoming property deliveries in Abu Dhabi and Dubai. The report highlights the effects of 15,000 new units expected in the capital in 2010, which will have an impact on both the Abu Dhabi and Dubai markets.

Ms. Jesse Downs, Director of Research & Advisory Services, Landmark Advisory, explains “In Abu Dhabi, much of the new supply expected for delivery this year will rejuvenate a market that has a low average standard of quality for existing housing supply. About 5,000 of these residential units will be delivered in the Investments Zones, like Marina Square, and we expect most of the hand-overs to be concentrated in Q3 2010, which will result in a few key trends.”

According to the report, the new supply will push down sale prices and rents in the capital. In terms of the sales market, actual price declines experienced within developments are linked to the payment plan structure. “In Marina Square, for example, payment plans are back-loaded with up to 70 percent due near completion, which is causing prices to approach the AED 1,000 per square foot mark. While we expect some marginal price decline as we approach handover of developments, these recent price declines are already closing the gap between seller and buyer expectations, which will continue to attract investment, and result in more transactions.” continued Ms. Downs.

Turning to leasing trends in Abu Dhabi and Dubai, rents continue to decline in both cities. Landmark Advisory predicts that rents will decline up to 20 percent by the end of 2010, with the sharpest declines occurring in H2 2010, following the handover of large portions of supply in the investment zones. Ms. Downs explains, “Once these units are available in the leasing market and rents decline, relocation within the city will increase, and we predict that middle-high and high-income commuters will gradually start relocating back to the capital.”

According to Ms. Downs, Abu Dhabi and Dubai’s rental markets are interlinked through commuter patterns. “Dubai rents are declining and will continue to decline due to increasing supply within Dubai and sluggish job growth. In 2009, rental demand in Dubai was driven by relocation, with Abu Dhabi commuters comprising a significant portion of that demand. As commuters and new residents working in Abu Dhabi move into the capital’s new developments, this will put additional downward pressure on residential rents in Dubai.”

Turning to the Dubai sales market, the report maintains that residential and office prices experienced further declines in Q1-10 with residential sale volumes decreasing due to the widespread anticipation of further price declines by potential investors. According to the report, increasing liquidity constraints continue to restrict mortgage availability and affordability; this limits owner-occupier demand and leaves investor sentiment steering demand.

Ms Downs continues, “The silver lining is the recent increase in commercial leasing demand stemming from corporates looking to relocate or establish operations in Dubai. Reduced office rents and a general reduction in costs associated with establishing and operating a business in Dubai is generating relocation interest from within Dubai, from other Emirates, and also from the broader GCC. In addition to affordability, regional companies are attracted to the high quality of infrastructure in Dubai and the improved capacity to attract and retain talent.”

“In Dubai, this is the trend to watch for forecasting demand for both the office and residential sector. Increased demand from corporates looking to relocate to or expand within Dubai will lead to job growth with expatriate job growth in particular set to bolster residential demand for the master developed communities,” concluded Ms Downs.

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Landmark Advisory was originally established in September 2006, under the name of Landmark Consulting Associates, with a mission to provide superior generalist advisory services in the areas of development and planning. In April 2008, Landmark Advisory was established and has brought with it the experience and network of Landmark Consulting Associate’s years of existence.

Jointly owned by a dynamic group of partners, Landmark Advisory’s founding members are the same group of professionals that founded Landmark Properties L.L.C, one of Dubai’s leading real estate brokerage. Landmark Advisory’s link into Landmark Properties, offers the group a unique position to closely study the real estate market, providing unparalleled access and perspective of the rapidly changing and expanding MENA market.

Our network of professionals dedicate themselves to thoroughly collecting and analysing information to illustrate opportunities that exist in this fast-paced industry. Furthermore, our specialised knowledge and experience within the MENA region, gives Landmark Advisory the confidence to accurately advise our clients around the world in making well-informed and intelligent real estate decisions.

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