Omniyat Holdings CEO Mehdi Amjad has dismissed recent speculation regarding the bursting of the Dubai real estate ‘bubble'.
"There is no bubble and I don't believe markets will see a sharp bust. We keep hearing that the supply and demand will be realised in 2008 or 2009, but while I believe that demand will become less extreme, it will continue to outweigh supply."
Amjad believes that a lessening in demand will be healthy for sustainability in the long-term.
"If Dubai has one or two years of inflation, then that's okay. But a decade of inflation is unhealthy. Long-term sustainability is the key for Dubai and the government is addressing this issue successfully."
Amjad said the Dubai market is continuing to absorb new launches, despite projects being delivered. This was displayed with the recent delivery of the International City and Jumeirah Beach Residence projects, he said.
"People were predicting that the release of JBR and the International City would lead to a decrease in demand, but the more than 25,000 units in JBR have been absorbed into the market without causing even a small drop in demand."
Amjad said Dubai is aggressively targeting population growth, which will also lead to growth in demand for real estate.
"The government is building a city for five million people whereas today we have fewer than two. This means that whatever is supplied now will not be enough," he noted.
"Markets are at a maturing stage. Rents are up and there are many people who are currently renting but who intend to purchase homes. This includes people who are on lower to middle incomes who are lower risk takers, and have been waiting to purchase properties.
"Finance and mortgages are increasingly available to these people, so more demand is being created there. There is a shortage in terms of products in this area of the market which we are addressing."
As a result of this new trend, the developer is looking for opportunities in the residential sector, and Omniyat will unveil a new 1.5 million sq ft residential waterfront development at the Cityscape exhibition in October, he said.
While few details are being released, Amjad described the project as a unique and surprising product, offering a combination of residential and retail space.
Amjad believes both institutional and private investors are also driving property demand in Dubai.
"Dubai is now seen as an international hub and foreign investors are being attracted to investing here. The new trust law is also helping these investors to have trust in the transparency of regulations here. Although we are yet to see the law in operation, I think its existence adds a professional structure to Dubai's real estate markets."
The majority of foreign investment is coming from the UK and Europe, but institutional money from the US and Asia is also increasing, he notes.
Amjad has his own development plans for international expansion, beginning with Saudi Arabia, and Abu Dhabi. He intends Omniyat to become an international company by 2008.
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