The major players of Dubai real estate arena, who have invested billions of dirhams in the property sector, have shrugged off the pessimism of double-digit price declines this year or in 2016, stating the market faces no oversupply issue and will continue to remain stable.
“Look at the clear cut information from the market and forget all those reports. Population, economy, tourism, number of visitors to the airport and infrastructure investment is growing in the emirate. If you see these factors and see the results of the two biggest real estate companies (us and Emaar) in the first half of the year, we both booked sales close to Dh13 billion… You have seen the number and nobody can dispute that,” Ziad El Chaar, Managing Director, Damac, told Emirates 24/7.
“Even the Dubai Land Department has reported Dh53 billion in transaction value in the first six months of 2015 of which Dh30 billion came from non-Arabs. This reflects the great trust in this market… so with all of this ‘2016 is still gloomy’,” he asserts.
In the first six months of 2015, the developer had marketing activations and launches in more than 40 cities across the world, aimed to promote Dubai and the local property market.
“This is why our numbers are strong… the real estate is not a passive industry but is an active industry. And all those people who are saying ‘the market is slowing down are passive developers’ and are expecting the business to come to them. They need to go and promote Dubai and the market. If they won’t do this, they will not get a piece of the cake.”
Though international consultants state that nearly 26,000 to 28000 new units will enter the market by year-end in Dubai, El Chaar does not believe so.
“How is that possible? We and Emaar have given indication to the market that less than 5,000 units will enter the market. And we both control more than 50 per cent of the market… so where is the number coming from,” he asks.
At the Cityscape Global 2015, which closed on Thursday, the developer launched Bugatti-designed villas in Akoya Oxygen development in Dubailand. Starting prices for these villas are Dh36 million.
The developer, as of March 31, 2015, has delivered almost 14,000 homes and has a development portfolio of over 37,000 units at various stages of progress and planning. It is currently working on two major master developments which are Akoya by Damac and Akoya Oxygen in Dubailand.
Finding interest and cheques
Ajay Rajendran, Vice Chairman, Sobha Developers, is confident of the market maintaining a similar growth rate of 2015 next year as well.
“We are finding interest and cheques. I cannot foresee price falling (10 to 20 per cent) in the areas we are working. The numbers are strong enough and considering the whole market is not in feverish pitch I think we have seen good enough and sound interest,” he told this website.
“Many a times people get worried about the bubble and then they get worried about the fall. At this pace there is enough of activity for serious developers to see sales and continue to construct and to move on from project to project. From our point of view, the pace at which things are going is acceptable to us and I believe next year we would expect to see a similar level of interest.”
The company is building two mega developments – Mohammed Bin Rashid City (MBR City) – District One and Sobha Hartland in MBR City, worth Dh48 billion ($13.10 billion) in the emirate.
In June 2015, Standard & Poor’s, a global ratings agency said property prices in Dubai’s residential housing market are expected to fall by 10 to 20 per cent this year.
Moody’s Investors Service, a global ratings agency, has also said prices will fall by 10 per cent this year but it believes government spending on infrastructure and encouraging more foreign investments in various sectors will support the real estate market over the next five years.
HSBC Global Research said previously sad that Dubai may see supply of 90,000 new units by 2018, but the market will absorb – fairly easily — the new supply even if the population grows less than five per cent per year.
A report issued by CBRE, a global property consultancy during Cityscape, said property prices in Dubai were nearly two times cheaper than London, with average prices for the top-of-the-end market in the emirate being $1,300 per square feet (psf) compared with $3,000 psf in London.
“Where recent growth has been particularly marked, investors are now expecting either slower or negative growth. Average growth in London and Dubai for example, as well as a number of other international markets, have hit double digit highs for at least two years prior to 2014. We’re now witnessing a market correction and more modest growth with small pockets of localised decline,” Safina Ahmad, head of Residential, CBRE Mena, wrote in the report.