Saturday, March 20, 2010

Dubai will remain Hong Kong of Middle East

The real estate market in Dubai will recover by end of 2011, with more easy access to mortgages and with increased population entering the city, revealed an official at the Dubai Pearl.

The Founder and Chief Executive Officer of Dubai Pearl, Santosh Joseph, when speaking during an interview, said that with Dubai property market having experienced a slump following global economic crisis, and with the selling prices having fallen by more than 50 percent, and with $300bn worth of projects being cancelled, Dubai Pearl is now depending on the $1.5bn paid-for apartments in advance, and another $500mn committed by Al Fahim Group.

Dubai Pearl is constructing four 73-storey towers, linked together with a single roof, and has the same name as the company. The main structure will be surrounded by an artifical beach and other low-risers, apart from malls, theaters and major hotels. The project was due for completion by 2013.

However, the onset of property crisis, prompted Dubai Pearl to review its project and include health and entertainment components to its design. The company also re-negotiated terms with buyers, such as offering longer payment schedules, to reduce instances of defaults.

Joseph said that there may not be much improvement in 2010 or 2011. Real estate cycles are usually three years peak-to-peak, with the best locations bouncing more quickly.

Meanwhile, the Chief Executive of KM Properties, Sanjeet Joher said that although the growth has slowed down considerably, certain trends in the UAE property market at present, will help in putting the market back to track.

Although, the growth in the market may not be the same as seen during the years 2007-08, keeping in mind the market value locally and globally at present, a more realistic vision needs to be maintained.

In the near future, supply will be restricted from 500 buildings to 200, and it will be delivered in a more staggering fashion, allowing the market to be more realistic. The prices too will be aimed at end-users and not speculators, Joher said.

According to Joher, one of the main issues faced by Dubai today is the lack of liquidity. The Tamani offices by KM Properties have 5 to 8 percent defaulters. Joher revealed that the company is assisting them on case by case basis, depending on their cash flow.

However, Joher has expressed confidence that Dubai will continue to do well. Being centrally located in the world, it was allowed to do well in the past, and this trend will continue in the future. Dubai will always remain the Hong Kong of Middle East, given its secure tax-free environment with good investment returns and infrastructure.

No comments: