Nearly three-quarters (74 percent) of investment professionals expect that the UAE’s residential and commercial real estate market will either stay flat or deteriorate over the next 12 months, according to a survey.
The poll by CFA Society Emirates also showed that in terms of the commercial real estate outlook for the UAE, 70 percent said they feel that the market will either stay flat or deteriorate.
The survey also revealed that while 45 percent of members believed that GCC’s real estate market is mature enough for REITS to flourish, another 43 percent believed that it is not.
It said investor sentiment and lack of understanding, along with a weak regulatory environment, are the biggest challenges for the growth of real estate investment trust (REITs) in the Middle East.
The poll revealed that the majority of members ranked expected returns from a REIT portfolio higher than cash equivalents and bonds, and said that they intend to invest in REITs.
However, they added that they believe that the returns from REITs would be lower than stocks, private equity and real estate.
Amer Abdul Aziz Khansaheb, president of CFA Society Emirates, said: “With the UAE’s real estate market having the highest demand in the GCC amongst regional and international investors, a less volatile asset class, such as REITs, is expected to become more attractive, as investors seek to reduce portfolio risk given the current macroeconomic environment.
"However, our survey shows that it is important for investment professionals to increase investor understanding about REITs and gain their trust through prudent and ethical investment strategies which put investor interests first. This, along with creating a more robust regulatory environment to gain investor confidence, is significantly important for the growth of REITs in the region.”
The CFA Society Emirates Society is an association of local investment professionals consisting of portfolio managers, investment advisors, educators and other financial professionals.