Slow path to recovery

This year was supposed to be a bit different; a bit more upbeat, a bit more positive. And to a certain extent, compared to the doldrums of 2010 and 2011, there seemed to be slightly more fire in the belly of Cityscape Global, the Gulf’s biggest real estate exhibition.

If you had time to read the breathless press releases pumped out every few minutes, you’d be forgiven for believing that the Dubai property market was back on an even keel. “Busiest Cityscape for four years confirms momentum in Dubai’s real estate market” claimed one. “Strong market demand and enhancing communities proves winning combination for Dubai Properties Group,” screamed another. But were those happy predictions actually reflected on the exhibition floor?

The team behind the event claimed that the show was 50 percent bigger than last year, featuring 172 exhibitors from 31 countries. However, the organisers also stated that there were more than 200 back in 2010, although the official list then only showed 121 exhibitors. Those numbers, of course, are a far cry from the heady days of 2008, when 954 firms touted for business at the event.

For those actually making their way around the show, it certainly seemed busier than the last three years, although rumours of queues building up outside the Dubai World Trade Centre were unfounded.

The big difference this year was the announcements. Whereas Cityscape has recently been more about branding, networking and trying to prove to investors that the big developers are still fighting fit, the 2012 edition was something of a throwback to days gone by. Meydan, Sobha Group and Falconcity of Wonders all threw their respective hats into the ring with bumper projects.

However, whether the flashy announcements and glittering new projects will be enough to tempt investors back into the market is yet to be seen. Many investors are still waiting for existing projects to be completed, and stronger regulations are still to be fully tested.

Deyaar, Dubai’s second-largest developer by market value, has been particularly hard hit by the price collapse in the emirate’s real estate market. However, in a rare appearance to the media, CEO Saeed Al Qatami told Reuters that stricter regulation was vital to future stability.

“When you activate rules and regulations, you will protect the market from speculators,” Al Qatami said. “Something like not allowing owners to sell a unit in the secondary market before paying 30 percent of the total value will stabilise the market.”

Much has been made of strong interest in recent project launches by Emaar in its Downtown Dubai project, and many buyers clearly still see the Palm Jumeirah as a strong investment. At the same time, those announcements concerned relatively small numbers of units, and were placed in premium areas where we already know that there is high demand. Nick Maclean, of property consultants CB Richard Ellis (CBRE), put it succinctly when he said that “the majority of activity is mainly in five locations: Downtown Dubai, Palm Jumeirah, Emirates Living, Dubai Marina and Jumeirah”, with other areas seeing “relatively little momentum”.

Outside those areas, demand has not held up quite so well. CBRE has highlighted Business Bay, Jumeirah Lakes Towers, Silicon Oasis and Jebel Ali as districts where poor infrastructure and design quality have played their part in attracting buyers elsewhere. And although property consultants and developers invariably disagree about the supply overhang, there will be thousands more homes making their way onto the Dubai market by the end of the year. Add those to the fact that new rules will restrict those working for Abu Dhabi government entities from living in Dubai, and it’s obvious that the prognosis is still somewhat mixed.

Ed Attwood is the Editor of Arabian Business.