(MENAFN- Khaleej Times)Prospects of an imminent end to international sanctions on Iran bode well for the UAE property market which is currently facing headwinds triggered by plunging oil prices property consultants said.
As property transaction levels continue to fall across Abu Dhabi Dubai and Sharjah in the backdrop of a 54 per cent decline in oil prices during the past 12 months property experts are becoming bullish of a turnaround once the sanctions regime that restricts Iranian investments overseas will be removed in the wake of a nuclear agreement concluded between Tehran and world powers in July Cluttons said on Tuesday. "It is our view that Iranian nationals will seize the opportunity to make significant real estate investments in Dubai. This is expected to be among the first lead indicators of the benefits to the UAE from the lifting of Iranian trade sanctions" analysts at Cluttons said in their report. In 2010 before international sanctions started to bite Iranians were the fourth largest foreign buyers of Dubai property behind Indians British and Pakistanis and accounted for 12 per cent of real estate transactions. Data from the Dubai Land Department showed investment from Iranians had dwindled to three per cent in Q1 of 2015. With property transactions dropping in tandem with the fall in oil prices UAE's residential prices including both villas and apartments are now 3.1 per cent lower than this time last year. In its 2015 UAE Property Report Cluttons reveals that the direct correlation between hydrocarbon revenues and state spending will put pressure on the rate of job creation. "A further reduction in oil prices is also likely once Iran receives the green light to begin oil exports. This will impact the rate of office space take-up and the creation of households and residential demand" it said. However the return of an Iranian variable to the national real estate equation could be particularly momentous for the real estate market. "We see a number of economic factors at play which will impact the level of transactions in the near term" said Steve Morgan chief executive Cluttons Middle East. He said the decline in oil prices has seen the government take fiscal measures to boost its financial position including the deregulation of fuel prices and the future move towards the introduction of VAT and corporation tax. These initiatives will likely cause consumer price inflation levels to increase resulting in a reluctance of tenants to pay higher rents and families to purchase homes. -
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