CISTERN GULF REALTY

Cistern Gulf Realty, a Real Estate Company based in the United Arab Emirates is one of the primary real estate companies in Dubai and the Persian Gulf’s surrounding regions poised to capitalize on the unprecedentedly affordable real estate market following the boom of recent years. Our knowledgeable team is here to help you navigate the choppy Real Estate market in the Arabian Gulf, and help you make the best real estate investment possible in this rapidly expanding area of trade and commerce.

Gulf Real Estate

Arabian cities originally built on the oil and gas industry, has grown into a global region with more than just moguls. With oil production dropping off in the next twenty years or so, it is important that UAE and other gulf countries look to other opportunities to remain current. Currently, real estate and construction make up the largest chunk of the economy – 22.6%, followed by trade at 16%. Tourism is also a huge industry.

With Dubai being such an important port-of-call for international business, it's easy to see how the city grew. Many of the banking and financial centers grew up next to the ports they service. The Dubai International Financial Centre has helped fuel information technology and finance operations in the area. Jebel Ali, The largest man-made harbor in the world, was constructed in the 1970's, and has helped popularize the port.

Companies such as IBM, Microsoft, Oracle, EMC, Dow Jones, Reuters have large holdings in the Dubai Internet and Media City. Dubai Internet and Media City is only one of the industry-specific free zones situated throughout the city. These areas are set up to facilitate trade amongst the industries welcomed in and around this region.

Like the rest of the world, Arabian Gulf and Dubai's economy in particular has been shaken by the recent global economic downturn. Their real estate market was hit particularly hard, as that was a large portion of what the economy was based on. Much like the problems encountered in other parts of the world, real estate had become highly over valued in the years leading up to the decline. This has shaken some people's faith in the system, but it proves that now is a better time than any to begin investing. Real estate professionals are looking to help people enter the market now, whereas they wouldn't have been able to a year ago.

As of 2002, Dubai was the first among Persian Gulf countries to allow property ownership by non-citizens. This helped account for the explosive growth in the years leading up to the 2008 crash. Market speculators swooped in to capitalize on the gains that were to be had in Dubai, while companies realized the golden opportunity of having a headquarters in the Middle East. Flipping houses has also been big business, but has become unprofitable. This is excellent for investors. With the downturn flushing out the unsavory practices that had permeated the industry previously, transparent business practices can now take the stage.

Real Estate Markets Stabilizing

Real estate prices in UAE may never return to previous levels. This is a good thing if the city is to compete with global hubs such as New York, London and Singapore, according to analysts. To compete successfully, the market needs to become better aligned with its intrinsic value, says a new report from Standard Chartered. The market is definitely hitting bottom, and is slowly moving toward the growth phase.

Dubai does not necessarily have the kind of advantages that the world's top real estate markets like London, Paris, Singapore, and New York have, and is hampered by demographic pressures and physical constraints. Despite the free market functionality built into the country's economic backbone, the Middle East is still a somewhat foreign sector to all but the savviest of investors. But, this turnaround will help make the city more accessible to new investors in the United Arab Emirates.

Signs of stabilization in the emirate's property market are encouraging, but further falls cannot be ruled out and should even be welcomed, according to analyst Philippe Dauba-Pantanacce. 'After a fall of 30 to 40%, the first signs of stabilization in UAE real estate sector have appeared, taking observers by surprise since further declines were expected,' he explained. 'Some caution is warranted as there are still question marks surrounding population flows in the coming months,' he added. The report pointed out that the amount of distressed stock on the market has gradually diminished and that mortgage lenders have begun to ease their requirements. All this bodes well for people looking to purchase real estate in UAE.

Some property companies are confident that the worst could be over and are reporting renewed interest among overseas investors. 'The market is showing early signs of bottoming out. However, it is too early to be absolutely sure,' said Peter Riddoch, chief executive of Damac Properties. If prices continue to drop more, this would become an even more excellent time to invest in real estate.

Potential Rebound in the Works

On the other hand, there are some indicators that are causing UAE prices to rise already. Prices increased 7% between July and September from the second quarter -- the first price jump since the market fell from its peak in the third quarter of 2008, Colliers said in its quarterly price index, which collates mortgage transactions on properties open to foreign ownership since the start of 2007.

“ The third quarter results indicate a ‘bounce’ in the market. We will have to wait for the fourth quarter results before we can say whether an underlying growth profile exists, indicating a potential recovery,” said Ian Albert, Colliers International regional director in Dubai. It is entirely likely that the bounce seen here is indicative of a potential recovery, but the real gains will not be seen until later, maybe even as late as 2011.

The average price of property rose to 1,016 United Arab Emirates dirham’s ($278) per square foot in the third quarter, compared with 949 dirham’s in the previous one. Apartment prices rose 6%, while villa prices increased 9% and townhouses gained 7%. Most of the increases seen in residential property were lower than those seen in commercial property.

A major downturn just at the peak of explosive growth can be the death knell for a growing economy. Fortunately, UAE has weathered the storm like others have not, and is still primed for expansion.

New Developments

The Dubai real estate regulatory authority has enacted measures against the rampant practice of flipping that distorted property prices in the country. However, one idea was turned down; there was talk of imposing a stiff tax on entities who purchased a newly built property, then sold it within a year. Other companies have taken their own measures to protect themselves. Some of the largest property companies in Dubai have moved to limit off-plan sales. With mortgage financing available with only a five percent down payment, buying off-plan properties has been very popular amongst short-term investors. But, short term investors are not what make a good and stable market. Long-term investors backed with solid plans are what make a good and stable market.

It is important to remember that when dealing with a stabilizing market, you need to work with people who are trustworthy, transparent, and interested in doing what is right for you – not what is going to earn them quick pocket change.