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Fri 11 Nov 2011 09:38 AM

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Alabbar sees 'challenging' Dubai homes market to 2014

Emaar chief remains upbeat on Dubai economic outlook despite real estate 'challenges'

Alabbar sees 'challenging' Dubai homes market to 2014
Mohamed Alabbar, chairman of Emaar Properties
Alabbar sees 'challenging' Dubai homes market to 2014
Dubai metro, Burj Khalifa, Dubai tourism
Alabbar sees 'challenging' Dubai homes market to 2014
Burj Khalifa, Dubai

Emaar Properties chairman Mohamed Alabbar has said Dubai's real estate will remain a "challenging" environment for two or three years but house prices are beginning to recover.

He also said he saw "optimism in the city" and confidence among consumers and the government, resulting in growth in key sectors of Dubai's economy.

He said in an interview on Bloomberg TV that tourism was experiencing strong growth while spending this year was up, adding that "things were looking good" for the emirate.

He conceded that challenges remained in the real estate market but said that he was confident the sector would "work through the next two or three years" when oversupply is likely to weigh on recovery.

Speaking in London, the high-profile UAE businessman said Dubai's property market had been in the doldrums for three years but consumers and contractors had adjusted to the new global economic realities.

"Frankly, I think prices have stabilised and in certain pockets of the city, they are moving upwards gradually so it is all good news," he said.

Analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by end-2012 could cause fresh declines in rental and sale prices.

Rating agency Moody's said last month that house prices are unlikely to recover until 2016.

Home prices in Dubai, the Gulf property market that had the biggest reversal because of the financial crisis, fell more than 60 percent in the wake of the global credit crunch.

But Alabbar insisted Dubai "is and would remain" a majority of Emaar Properties' income because of its "growth rate and government policies".

House prices in Dubai showed signs of recovery in the third quarter, with slight rises in prime projects such as Palm Jumeirah and Arabian Ranches, Jones Lang LaSalle said in September.

On the future of Emaar, Alabbar said he was looking "seriously" at Africa and Asia for expansion.

Operating in 17 countries mostly in the Middle East and India, he added that he believed the company could still see strong growth in developing markets.

Last month, Emaar Properties reported a 34 percent drop in third-quarter net profit.

The UAE's largest developer by market value, which is the builder of the Burj Khalifa, the world's tallest tower, made a profit of AED406m ($110.5m), compared with AED612.3m during the same period last year.

The developer, whose profits have dropped for the last five quarters, said it made a revenue of AED1.86bn in the third quarter.

Alabbar also told Bloomberg's Francine Lacqua that he was also working on creating a "mega downtown project" in a country but could not give any further details.

And he hinted that he would be interested in projects in Kabul, Afghanistan once stability has returned to the country.

He said Dubai remained a "paradise of hope" in the Middle East region which has experienced difficult times recently in the likes of Libya and Iraq.

He insisted that key sectors of Dubai's economy - including the finance centre of DIFC, technology, media - and its trade with Africa and India, described by Alabbar as "our China" were all growing at an "incredible rate".

Altamash javed 8 years ago

I met him at a conference in Dubai last year and he was all talk about recovery and how rea estate looked great. I told him he was wrong which felt good. Good to finally see a more realistic view coming out of him.

Birdie 8 years ago

Once again AB is being populist as is evident by the headline it has chosen for this article.

It would have been more appropriate to have it titled as 'Al Abbar sees pockets of recovery in a stable market' , which is what he said.

The slant and twist given to his statements is having a deleterious impact on the credibility of this publication.

And let me reiterate , there won't be 33,000 units delivered in 2012 .

I wish AB would show some more responsibility, and verify figures before it publishes them.

In fact there will be no than 10,000 units in 2012, commercial included, against a demand for 15,000 residential units.

Telcoguy 8 years ago

does this demand include all the empty apartments in Marina?

JohnA 8 years ago

If your going to make statements about the number of units coming online and the demand for residential units at least provide the source of your data.

The biggest issue we had during the boom year was this constant guessing and throwing around imaginary, made up numbers.

I have no sympathy for the idiots who quit their day jobs to become "real estate investors", with little experience beyond jumping on the latest and greatest project and flipping it. They'd all gather around cafes and bars and inflated each others egos about how they just bought the greatest property and were going to make a killing off of it. Their source for data was a friend of a friend.

One particular guy who quit his well paying day job as a finance manager of a district cooling company to become a "real estate investor". As signs of a down turn started to show he bragged how he could sell all his properties, bought with borrowed money, and live overseas a well off man. Funny enough, he bailed two months later

Red Snappa 8 years ago

Moody's say 2016, the subject of the article says 2014 for a semblance of recovery, I believe he said 3 years hence at the start of 2011, so he's consistent. I think most of us expect a sprinkling of recovery by 2015, but there's still considerable regional geo-political instability which is the offset. Syria and Yemen have yet to be solved, Egypt, Tunisia and Libya are underway. With the Iranian scenario volatile just across Al Khaleej, which spooks investors.

By the way, I too am confused about the origin of the number of units that will be delivered this year down at 10,000 with a demand for 15,000 units as declared by our avian friend. DAMAC alone for example had already delivered 4,072 units by the end of September. Tameer have 692 close in Elite Residence, Deyaar started handing over 595 in April with other buildings due this year, Nakheel 1,663 at International City, 335 at Masakin Al Furjan, Dubai Properties phase 2 of The Villas and all their built-to-lease the list goes on!

Dubai academic 8 years ago

AB is the most negative of the digital media in UAE, with regards to Dubai real estate. Even the regular contributing commentators, (it appears to the casual reader), have nothing good to say about Dubai.

You wonder what is the motivation?

The real estate investment is not bad with a tax free return of 6 to 10% rental returns( equivalent to 10% to 14% in the UK or US), plus some potential for slight capital gains'

Quite good for nowadays.

Adeeb 8 years ago

After all , Emaar delivered very succefull projects, and all Dubai residence are proud to live their , and Mr Abbar was behind that,
So we can trust that he knows what he is talking about

gordon 8 years ago

Dubai Acedemic where is this 6-10% return.

I am looking for it.

I see rents in the Tiara at approx 100 per sq ft.
That results in 80 net. for 6% - 10 % I would pay approx 800 - 1300 I see the prices are above 1400.

If we take the average of 8% that would value the property at 1000 per sq ft. which means they are still 30% overvalued.

If rents do decline further....then the overvaluation is even higher still.

As I said..I do want to buy...but I see a mismatch..

Omar 8 years ago

I dont understand what real estate people want other than making easy millions in 1 month and go back to their countries. Despite 30-50% drop from 2008, prices are still VERY high in Dubai. 1 bedroom in greens is no less than 65-75k, 20,000$. That's more than LA or Milan or top global cities. Please dont compare to London like many silly people who dont know the real world do. That's totally different! A small isolated 3bed villa in Springs is no less than 3500$ a mont (AED 135,000 per annum). I want to move there and i am checking Dubizzle right now)!!!! Even Shorooq in Mirdiff deep inside the desert is no less than 20,000$PA for a small 2-bed right above the noisy runway of a very busy airport!!! Everybody realizes extremely well that Dubai is indispensable by regional standards and tax free high stabdard of living by global standards and this is more than enough to make Dubai sustainable and high prices! In fact, prices should DROP 30%

Birdie 8 years ago

If you go through it carefully Mr Alabbar is actually very positive about the Dubai economy .

The one statement wherein he talks about "challenging environment for 2 or 3 years" in fact relates to the construction industry, builders and developers; and not to sales of homes in the secondary market.

Which is actually very good for home prices as future supply dwindles but population continues to increase 5% p.a with rising economic growth.