PORTFOLIO | Property Ready Reckoner
He cutions that there is still interest from
bullish long-term speculators (as opposed
to quick flippers) to invest in off-plan
properties, as they believe that property
prices will continue to rise over the next
few years, thereby delivering them capital
growth on their investments.
A Tale of Two Cities
While residential sales in Dubai last year
recorded across-the-board declines, with
villa sales prices down year-on-year by
11% and apartments by 8%, in Abu Dhabi
saw apartment rental rates increase,
on average, by 5%, with prime projects
achieving up to 10% growth, and 3-4%
growth for apartment sales prices, as per
Asteco figures.
Industry experts have also declared the
new property law will benefit Abu Dhabi’s
real estate growth. Abu Dhabi’s new
Property Law No. (3) of 2015 took effect in
January this year. Chris Taylor, CEO of Abu
Dhabi Finance, is confident that recent
legal and economic developments in the
capital will bring best practice into the
capital’s real estate, with numerous factors
contributing to buyers’ security and
subsequently enhancing growth.
There’s one more difference. Unlike Abu
Dhabi, in Dubai the pipeline of supply is
massive as many projects having been
announced in the last couple of years. As
Sameh Muhtadi, CEO of Abu Dhabi-based
Bloom Holding, explains, “. An estimate
of up to 50,000 units is in the pipeline
for delivery in the next 3-4 years. On the
contrary, the Abu Dhabi property market
doesn’t have a supply overhang. In fact,
the market has a scarcity of supply, both
on the sales as well as leasing fronts.”
Wrapping up, UAE’s, and especially
Dubai’s property prices are expected to
rise as growth returns. There’s a broadbased real estate pullback, with prices
correcting in many areas but things
are stabilizing now. The drivers for this
slowdown are a mix of supply-side factors
and demand-side factors, but there’re
signs that the upside will finally unravel.
The odds of a further price correction
is remote, unless black Swan events
take place that are almost impossible to
predict.
Ahmad Al Matrooshi, Managing
Director, Emaar Properties, sums it up
like this, “Dubai’s property sector has
evolved significantly over the past few
years and is today a maturing market with
strong demand from end-user investors.
The core economic sectors of Dubai
including tourism, retail and hospitality
are performing well. The ongoing
preparations for Expo 2020 Dubai and the
infrastructure projects being developed
continue to attract professionals from
around the world, in turn benefiting the
real estate market. The various measures
undertaken by the government authorities
have strengthened the property sector.
Flipping, a practice that fueled concerns
in the past, has been curbed. Apart from
governmental regulations, Emaar has
also introduced several measures in
place to protect the long-term interests
of investors and to prevent unhealthy
speculation.”
In a nutshell, in a property market
going through speed bumps get your
ducks in a row before you make decision
to buy or rent.
“Dubai Property Cycle Turns Faster”
Dev Maitra, CEO of Dubai-based Indigo Properties, says what makes
Dubai property market unique from other parts of the world is that the cycle tends
to be shorter and faster
What stage of the cycle Dubai property
market is in currently, and how has this
influenced your market strategy?
Real estate market is cyclical in nature,
like any other industry. However, what
makes Dubai property market unique
from other parts of the world is that the
cycle tends to be shorter as the cycle turns
much faster, on the back of the strong
growth opportunities that Dubai property
market offers. We’re already in the bottomend of the cycle and the wild distress has
been eliminated. Given the slow but sure
revival in crude oil prices in recent months,
I believe Dubai property market is now on
the cusp of a steady upturn, unless some
black swan events take place. Therefore, it
is a good time to buy now, especially from
the end-user perspective. Having said
that, the current market conditions have
benefitted us as a developer as the costs
April 2016 | www.wealth-monitor.com
of building materials and construction
have gone down.
Dubai residential property prices
continue to soften faster than the rents
in many areas. How do you see this
paradoxical trend?
What drives the value of real estate
fundamentally is demand and supply.
However, there’re many factors at play
behind this demand dynamics — such as
investor sentiment, growth prospects and
population. Supply on the other hand is
generated by the developer launching the
project. Over the last few years, authorities
in Dubai have been taking steps to
restrict speculations and which allows
only serious developers to remain in the
market. While these steps are welcome,
they have created supply side limitations
in the market, which have failed to meet
the demand of rising population, a
large chunk of which still prefers to rent
housing. Because of this, rents in many
areas have either remained steady or have
even gone up. I think this is a sign of a
maturing market.
Going forward, do you expect
developers to focus more o