The road ahead

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Mike Hynes - Kershaw Leonard.

Given the rising cost of living in Dubai do you believe employers will increase salaries and benefits packages for their staff in line with inflation?

Our survey in 2007 claimed that the real inflation rate in Dubai is around 20%. So just to keep pace with that the private sector would have to increase their overall packages by 20%. I don't think there are many private sector companies that can offer 20% pay increases. There is generally a focus on trying to retain staff, not just by increasing their salaries but by improving the quality of the work environment, building teams and providing more performance based incentives.

Do you think that as a result of the rising cost of living and the inability of some employers to accommodate for this, that more expatriates will leave Dubai in 2008?

There's a real danger that Dubai is already being seen by a lot of people as an expensive place to live. Three years ago most people had the ability to save. Whereas these days a large group of people are actually spending more than they are earning. Any more price increases could be the straw that breaks the camel's back for some people and they could leave as a result.

Philipp Haenle is a property broker and property portfolio manager with Sherwoods Independent Property Consultants, a property consultancy with offices in the UK, Dubai, Abu Dhabi and Bahrain.

Do you think there will be a correction in property prices in Dubai in 2008?

I don't think there will be a significant price correction in Dubai. One reason for that is that the master developers keep on increasing their prices and successfully selling their products. There is also a very active resale market for high quality units in prime developments in Dubai. If you look at a developments like Business Bay for example, commercial properties there were being sold at Cityscape for up toAED2,800 per square foot.

But now on the resale market they are being sold for up to AED3,400 per square foot.

Demand for property is still very high and many developments are being sold out before they even reach the public launch stage.

In well known developments and good quality, well planned master developments I believe that prices will in fact continue to rise.

Which developments do you think will see the most demand from buyers?

Dubai Waterfront as an overall master development will be very popular and I predict that we will see more and more people moving towards Jumeirah Lake Towers.

I predict there will be high demand for properties in Downtown Jebel Ali once the properties there are launched. That I can guarantee will attract a high volume of interest. Jebel Ali will soon have a fully functional airport and that will make it a very attractive place for both residents and businesses.

Which types of properties will be most in demand in 2008?

For families, probably villas - particularly those with their own gardens.

The villas within master developments are always going to be in high demand because of their strong appeal to a certain clientele.

For single expatriates staying in Dubai for the short to medium term, one-bedroom flats will be in high demand.

Who will be buying property in Dubai in 2008 - UAE residents or foreign investors?

I think that many of the expatriate population living in the emirate that have not yet invested in property in Dubai will do so in 2008. But Dubai is also attracting a lot of capital from international investors. It attracts capital from all over the place. The number of overseas investors significantly outstrips the numbers of residents buying property in Dubai.

Do you think the mortgage market in Dubai will expand in 2008?

The market will expand because more and more people will enter the property market. Only a minority can afford to buy these properties in cash so I think that definitely the mortgage market will expand to accommodate this and the offers being made by the banks will become more attractive to fuel this growth.

At the moment mortgage interest rates range from between 7.75% to 9.25%. I don't think this will change in 2008.

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