Thursday, September 04, 2008

UAE realty sector hoped to cool down and witness corrections

The prevailing high prices in Dubai realty sector are likely to be short-lived, and a slowdown is expected, announced the Chief Executive of Daman Investments, a top asset management company.

"Prices are sure to stop growing at this maddening pace. I doubt we will see a significant long term bust. But we will see corrections" said Shehab Gargash, CEO, Daman Investments.

According to Shehab, with the demand continuing to grow, the realty sector will witness growth and prices will continue to increase. But Dubai is no longer a direct build-and-sell proposition. During the past weeks, the UAE realty sector was in the limelight for several reasons, such as the much talked about Morgan Stanley report, which indicated a 10 percent drop in prices by the next two years, when the supply comes into stream.

The market is in a consolidation phase, and will see a differentiation among good and bad quality developers, Shehab added.

Mohammad Nimer, CEO of MAG Group Property Development, agreed that the prices are no-doubt sky-high, and is getting less attractive for investors and end-users, and hence, a correction is bound to take place. The people who already purchased property will realize that the price paid was 'inflated', and secondary market buyers and investors will think twice before investing.

The Government of Dubai has now passed a mortgage regulation, making registration mandatory, which cracks down off-plan sales, and reduces fears of speculation in the market. This will surely have a positive impact on the market, although the market will face a slow down. But, it will sure make the market stronger, he added.

Sudhir Kumar, the Managing Director, Realtors International, pointed out that premiums in witnessed in the market, during the recent years, have now become a past. He, however, said that he does not expect a slowdown in the market within next two years.

Temporary shake ups may happen, but, considering the corrective measures being taken, when all the regulations are passed, abnormal premiums are unlikely to happen, he added.

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