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Al Mazaya Real Estate report believes
that low oil prices may not be a short-
term phenomenon and are most likely
a more accurate reflection of reality
than the high prices of recent years.
If this is the case then we believe
Gulf states may significantly rethink
their 2016 budgets in order to avoid
running unnecessary deficits. At
the least, they will look for areas in
which savings can be made and we
predict we will see borrowing taking
place in the form of the issuance
of treasury bonds. The real estate
sector will likely be affected in two
ways: by reduced flows of liquidity
with which to finance projects, and
by reduced market confidence, which
will be felt in slackening sales and
leasing figures. If prices go south,
as it is likely they will in the face of
slower market demand, bear market
momentum will be generated that will
become increasingly hard to reverse.
Mazaya Monthly Real Estate Report -
Week 2 - October 2015
In light of these prevailing market
conditions, it was interesting to see at
Cityscape Dubai in October the sheer
volume of projects that were announced
and slated for delivery across the
region. It would be easy to assume,
from attending the conference alone,
that either the industry is in denial about
the potential ramifications of a low oil
price, or that it has not yet adjusted
its thinking accordingly. The projects
unveiled at Cityscape totalled more
than AED1tr, an increase of some fifteen
percent on 2014’s show. This report
believes the region’s developers must
look carefully at market dynamics before
pressing ahead with any of the projects
unveiled at Cityscape to ensure they
do not find themselves on the wrong
end of a supply glut, particularly in the
luxury residential villa and commercial
office space ends of the market.