It is business as usual for Dubai developers at the start of 2016, as they continue their construction plans, despite the housing market’s recent period of moderation.
Sales of Dubai real estate cooled last year, with prices dipping and market regulations tightening to discourage the kind of speculative investment that led to the emirate’s boom and bust in 2008.
Property transaction fees were doubled by Dubai authorities, with mortgage deposit requirements also increased. Experts are also concerned that the dive in oil prices in the last year could have an impact on the market. Indeed, Cluttons estimates a drop of 3 to 5 per cent in property values during 2015, although a recent report from KPMG forecasts that prices will begin to recover next year.
Developers, however, are upbeat about conditions at the start of the year, with work on projects continuing as planned.
“Emaar is progressing as scheduled with all its projects launched,” a spokesman for the builder of the Burj Khalifa told The National, despite the developer’s sales revenues dipping a reported 28 per cent in the first nine months of 2015.
“Sales enquiries have continued to be robust, led by strong interest from regional and international investors,” added the spokesman.
Damac Properties also says that demand is there and that it would not slow construction in order to meet it.
“There will continue to be an under-supply of completed units in the market; based on Dubai’s economic growth, demand should outstrip supply,” a Damac spokesman commented. “It’s very much business as usual.”
Their bullish outlook arrives at a point when sentiment is improving once again in Dubai’s real estate. Figures from the Dubai Land Department show that a record total of AED68.48 billion has already been transacted in the first three months of 2016, painting a positive picture for the coming year.
The emirate’s hosting of the Expo 2020 exhibition in four years’ time is also expected to bolster the market’s bottoming out and recovery, supported by ongoing, robust population growth.
To avoid flooding the market with supply, The National reports that developers are debating delaying the handing over of units when completed, swallowing a short-term hold-up on sales revenue to prevent weighing on prices. Indeed, three of the emirate’s four biggest developers (Emaar, Nakheel and Dubai Properties) are state-controlled, which helps the co-ordination of supply. Indeed, JLL estimates that only 35 per cent of residential units scheduled for handover were delivered to buyers in the last five years, with other sales postponed.
Developers also have an optimistic attitude towards the recent dip in prices.
Nakheel Chairperson Ali Rashid Lootah told an industry conference in Canned that the cooling values were a “good correction – we don’t want Dubai to be too expensive”, reports the Financial Times, adding that the financial crisis in 2008 was a “good lesson learnt”.
At the start of 2016, Lootah says the Dubai real estate market is “very stable”, with demand “less but it has stabilised”.
Continuing construction will only encourage that demand in the short-term, helping to make Dubai’s housing recovery a reality – and bring business back to an even better normal.
Some Dubai developments currently under construction:
Name / Location: Serena, Dubailand
Who’s building The Dubai Properties Group
The Dubai Properties Group has announced an 8.2 million square-feet master-development, which will be developed across five phases, the first ready in Q4 2018. The Spanish-themed project will consist of clusters of four to six units. Phase 1 will have two and three-bedroom townhouses and three-bedroom semi-detached villas.
“Dubai Properties is helping lead the resurgence of Dubai’s real estate market through the strategic development of mixed-use destinations, as we anticipate and deliver on the rapidly changing and diversifying Dubai,” Abdul Latif Al Mulla, Group CEO of DPG, tells Gulf News.
Name / Location: Aykon City
Who’s building Damac Properties
The canal extension of Dubai continues, with Damac unveiling Aykon City, a six-tower cluster on 4 million square feet on Shaikh Zayed Road. The first off-plan units have already been released, with at least Dh7 billion expected to be generated in sales across all phases.
Name / Location: Town Square
Who’s building Nshama
Nshama, which specialises in mid-market offerings, will soon begin the phased release of another 2,000 homes, in addition to the 2,000 units already released last year at the Town Square on Al Qudra Road. The median price of units so far has been around Dh800 per square foot.
“Almost all of its has been sold,” reports Zawya.
Name / Location: Marina 101
Who’s building National Engineering Bureau
The NEB is still working on its Marina 101 project, with finishing touches to the residences to be completed soon and work on the Hard Rock hotel set to begin shortly. The $355 million building, which will become Dubai’s second-tallest tower, is running five years behind schedule, notes Arabian Business, but is on track to open by the end of 2016.
Photo: Hard Rock Hotels