News: UAE real estate firm Emirates NBD Properties has acquired space in the Index Tower in Dubai, according to AMEinfo. The tower forms part of the Dubai International Finance Center and is owned by UAE property firm Emirates REIT. The deal was worth AED122mn (US$33.2mn) and is for retail space at the property.
BMI View: Supply of office space in the UAE exceeds demand, placing downward pressure on rental rates in the short-to-medium term, especially in light of the less than impressive macroeconomic backdrop. However, in the long term we expect this surplus to be absorbed by an economy poised to deliver robust growth rates on the back of both high oil prices and diversification. In 2012/13, the outlook for the UAE construction sector remains bearish, driven by the aforementioned oversupply, lingering fears over the creditworthiness of leading real estate firms and global economic troubles. The office sector across the UAE epitomises this supply and demand imbalance.