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Omniyat dismisses Dubai property bubble
The demand for homes and offices in Dubai will continue to exceed supply in the coming years, a leading UAE-developer said on Wednesday, the latest to dismiss theories of a bubble in the emirate’s real estate market.
Mehdi Amjad, president and chief executive of Omniyat Holdings and Omniyat Properties, said the imbalance between supply and demand in Dubai's buoyant real estate market is expected to continue well into the next decade.
"The whole bubble theory is a bubble that has been burst," said Amjad in a statement. "We keep hearing that the balance between supply and demand will be realised in 2008 or 2009 - people who are saying that are not actively involved in the Dubai market, but just commenting on it from their ivory towers based on their experience in other markets."
The developer’s comments come after a report on the UAE's real estate market said though 175,000 new residential units will be available by 2010 in Dubai, demand is set to outstrip this, with an estimated 181,000 units required by the end of the decade.
The report suggested 75% of the emirate's planned projects for the next decade will be in the property sector, worth around at $230 billion.
Speaking in response to increasing speculation about supply and demand figures for the emirate, Amjad said with the expected doubling of Dubai's population in five to eight years, massive demand for property will continue.
"The government is building a city for five million people whereas today we have fewer than two," he said. "This means that whatever is supplied now will not be enough and won't be for many years to come."
The explosive growth of Dubai’s residential property market has sparked fears of a market crash and concerns over the economic and social impact such an event would cause.
Amjad did say he expects to see a cool down in the extent of demand outstripping supply in the emirate’s real estate market compared to the last two years.
"The Dubai government is doing all it can to meet the demand," Amjad said. "It is making more land available for development and it is controlling the cost of raw materials such as cement. It's attracting new developers and new construction companies whilst also providing facilities and the necessary legislation to protect investors, developers, and home buyers," he said.
Rocketing property prices have had the greatest impact on the cost of living in Dubai, with Standard Chartered Bank raising its 2007 inflation forecast for the UAE this week to 9.3%.
Some analysts say Dubai's steep inflation rates are preventing people from buying property in the city as they are unable to save enough money to make a purchase.
Amjad added taht although earlier projects had targeted more wealthy investors, the real estate market was maturing so developers could now target the middle and lower segments more effectively.
"Many developers now have projects catering specifically for this segment and Omniyat Properties will also be launching projects for this market very soon," Amjad said.
"The government is also doing more to provide mortgage and financial facilities which are important for this group of buyers."
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