Investment property in the UAE – Distressed commercial property on the rise

As per usual, getting any solid factual information about the state of the UAE’s property investment market is difficult, but a recent survey by the Royal Institution of Chartered Surveyors (RICS) points to another rise in commercial property defaults in the UAE for the second quarter.

Still – this is not terribly surprising and the UAE is by no means alone in this. A world wide survey was conducted, with the UAE coming in 13th from the 27 countries surveyed. South Africa and the USA were top of the list. New Zealand, Malaysia and Hungary were next, with The Caribbean, Ireland, Spain, Russia and Ukraine filling out the top ten spots..

Over 75% of respondents reported a rise in the number of commercial properties that are coming to market under distressed conditions in the second quarter of 2009 compared to three months earlier and the general feeling is that it will get worse before it gets better, with commercial defaults continuing to increase through 2010. Whatever may be said in the newspapers, refinancing a mortgage, commercial or other wise, remains difficult. Especially with the drop we have seen in commercial property values.

At the boittom of the chart, China and Brazil reported a decline in the number of distressed properties coming on the market. China because the government is basically buying everything up and taking them off the market, although Brazil seems to be weathering the storm comparatively well. Germany, the Czech Republic, Hong Kong, Japan, Italy and Switzerland, all reported little change, which is not exactly encouraging either. There should be some commercial bargains floating around for at least the next 18-36 months.