Property expert predicts up to 25% drop in rents

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PROPERTY PREDICTION: Rents are seen falling by up to 25 percent during the next 18 months.

The managing director of the Dubai Real Estate Institute (DREI), which aims to develop the emirate's property sector leaders of the future, sees rents falling by up to 25 percent over the next 18 months.

Dr Salem Al Shafiei also predicted that layoffs among sales and marketing staff were likely to continue in an interview with Arabian Property.

“The GCC has always had phases of ups and downs due to oil price changes. Before it gets better it will get worse but it will get better ultimately – like the traffic in Dubai,” he said.

Al Shafiei believed the market would see some supply and demand challenges in 2009 and predicted that about 45-50,000 units will enter the residential market between the first and third quarters of the year.

He also sees rents dropping by up to 25 percent over the next 18 months.

“This is from an already inflated base and it is not that people are losing money but people who wish to make high returns in a short time have to revisit their numbers. That is happening all over the world,” he added.

Al Shafiei said he believed there was a shortage of property management experts in Dubai and the DREI was adjusting the focus of its real estate course to reflect this.

“In the Institute we have shifted gear from a period where we used to focus, in a big way, on real estate development. Now that it is slowing down we are shifting gear to real estate management.”

He applauded Dubai government's budget for 2009 for including some capital intensive projects such as the completion of the metro network and the construction of the new airport.

Al Shafiei also called on developers to incorporate more middle or lower-end accommodation in future projects.

“What is needed is for the government to start encouraging this and to introduce and offer incentives for a better housing mix.”

For the full interview and a special feature on how the major players see the real estate industry in 2009, see the next issue of Arabian Property due out at the end of Feb.

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