UAE commercial landlords offer tenant incentives as demand falls

Demand for commercial property among both investors and occupiers continued to weaken in the second quarter of 2017 said the RICS. (Reuters)
Updated 14 August 2017

UAE commercial landlords offer tenant incentives as demand falls

LONDON: Commercial property landlords in the UAE have been forced to offer tenants better incentives to stay as occupier demand fell for the seventh consecutive quarter.
The claim, made in the latest quarterly report from the Royal Institution of Chartered Surveyors (RICS), represents the latest dampener on hopes that the market may be about to turn the corner.
Occupier demand fell across office, industrial and retail property as the amount of leasable space continued to rise.
“The excess supply combined with deteriorating demand prompted landlords to increase inducements further during the second quarter,” the report said.
Near-term rent expectations remained downbeat for the ninth consecutive quarter while 12-month rent expectations also edged lower with respondents expecting a fall of more than 2 percent over the coming year.
RICS also said that the trend in foreign enquiries relating to taking commercial property was also in negative territory.
Most respondents to the survey thought the market was in mid-downturn, while 21 percent said it was near the bottom.
According to estimates from property broker JLL, the Dubai office market saw the delivery of about 33,000 square meters of office space in the second quarter of the year.
A further 190,000 square meters is expected to be completed in the second half of 2017.
The broker said that no major office completions took place in Abu Dhabi during the second quarter with the total stock of office space remaining at 3.5 million square meters.
Job losses have hit some corporate occupiers in both UAE cities, as the weak oil price and subdued consumer sentiment hurts demand for commercial space.
The retail sector has also come under pressure because the strong dollar, to which the dirham is pegged, has made purchases expensive for some holidaymakers.
Still, the RICS said that the supply of properties for sale is rising at a slower pace across all sectors and that projections are marginally positive for prime retail assets in the country.
The Investment Sentiment Index moved to a reading of -14 from -35.
That shows that even though overall conditions are deteriorating, the negative trend is diminishing gradually, RICS said.
However prime office locations as Dubai International Financial Center and Dubai Media City remain in high demand with tenants.
Globally, commercial property sentiment remains in positive territory according to the RICS Global Commercial Property Monitor.
Both the headline occupier sentiment and investment indices were positive in 23 of the 32 countries tracked.


Economists fear a US recession in 2021

Updated 19 August 2019

Economists fear a US recession in 2021

  • Trump’s higher budget deficits ‘might dampen the economy’

WASHINGTON: A number of US business economists appear sufficiently concerned about the risks of some of President Donald Trump’s economic policies that they expect a recession in the US by the end of 2021.

Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report being released Monday, said they believe a slowing economy will tip into recession in 2021. 

That’s up from 25 percent in a survey taken in February. Only 2 percent of those polled expect a recession to begin this year, while 38 percent predict that it will occur in 2020.

Trump, however, has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the financial markets and saying on Sunday, “I don’t think we’re having a recession.” A strong economy is key to the Republican president’s 2020 reelection prospects.

The economists have previously expressed concern that Trump’s tariffs and higher budget deficits could eventually dampen the economy.

The Trump administration has imposed tariffs on goods from many key US trading partners, from China and Europe to Mexico and Canada. 

Officials maintain that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But US trading partners have simply retaliated with tariffs of their own.

Trade between the US and China, the two biggest global economies, has plunged. Trump decided last Wednesday to postpone until Dec. 15 tariffs on about 60 percent of an additional $300 billion of Chinese imports, granting a reprieve from a planned move that would have extended duties to nearly everything the US buys from China.

The financial markets last week signaled the possibility of a US recession, adding to concerns over the ongoing trade tensions and word from Britain and Germany that their economies are shrinking.

The economists surveyed by the NABE were skeptical about prospects for success of the latest round of US-China trade negotiations. Only 5 percent predicted that a comprehensive trade deal would result, 64 percent suggested a superficial agreement was possible and nearly 25 percent expected nothing to be agreed upon by the two countries.

The 226 respondents, who work mainly for corporations and trade associations, were surveyed between July 14 and Aug. 1. That was before the White House announced 10 percent tariffs on the additional $300 billion of Chinese imports, the Chinese currency dipped below the seven-yuan-to-$1 level for the first time in 11 years and the Trump administration formally labeled China a currency manipulator.

As a whole, the business economists’ recent responses have represented a rebuke of the Trump administration’s overall approach to the economy.

Still, for now, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains near a 50-year low and consumers are optimistic. US retail sales figures out last Thursday showed that they jumped in July by the most in four months.