Regional real estate markets have been forecast to stabilise next year and recover in 2011 on account of an improvement in investor sentiment, market researcher Jones Lang LaSalle said in its latest report.
A key component of this recovery will be the ‘attraction of the long term institutional investment’ into the real estate sector, it said. Some improvements have been made to creating a positive investment climate and improving overall competitiveness at the macro level.
Progress has also been made in meeting the requirements for real estate recovery in many markets across the region. The greatest remaining challenge is at the real estate industry level, Jones Lang LaSalle noted.
“Major changes are still required in the attitude of the existing owners, to position their assets making them more attractive to regional and global long term investors,” it said.
Doha is among the cities Jones Lang LaSalle identified to ‘record the strongest performing real estate market’ in terms of the appeal to long term investors, over the next 12 months.
However, Jones Lang LaSalle, cautions that their ‘attractiveness is constrained by relatively high current pricing and the limited availability of investable product.’
Some initiatives outlined by Jones Lang LaSalle for creating an investable product include price adjustment, stable cash flows, asset management, and legal structuring.
Owners must recognise the true value of their assets in the face of the current market trends and price accordingly. They should look to ensure stable income for their operating assets. This, Jones Lang LaSalle said, may involve accepting longer term leases than have traditionally been offered.
Owners must implement an asset and property management strategy, which can considerably improve the value of the asset over the long run. They have been asked to make sure the legal structure of the property is in line with international industry norms.
According to Jones Lang LaSalle, Abu Dhabi, Dubai, Cairo and Casablanca are ‘best positioned’ to attract more long term regional and global investment into their real estate markets over the next two to three years.
“While these markets may see a continued decline in short term performance, they are considered to offer the right combination of investment competitiveness, real estate market conditions and asset-specific ingredients to attract long term investors,” Jones Lang LaSalle said.
The report noted that real estate prices and rentals have declined between 25% and 50% in some markets across the region and most markets have experienced a dramatic downturn in the volume and size of real estate transactions.
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