By Ed Attwood and Massoud A. Derhally
CEO of emirate's biggest landlord says market is undervalued, Daman CEO predicts property "comeback"
Some assets in Dubai’s property market are now undervalued, and it is realistic to expect that prices can regain their 2008 highs, one of the emirate’s most prominent property bosses has claimed.
Hesham Al Qassim, the CEO of Wasl Asset Management – which is the emirate’s largest landlord, managing the property portfolio owned by the Dubai Real Estate Corporation – said that current prices meant that now was “the right time” to invest in the local market.
“In terms of freehold, all the residential units [in the Wasl portfolio] are seeing good demand again and the market is starting to roll over again,” Al Qassim said, in an interview with Arabian Business.
“I think it’s the right time for it. The market has to move at some point; it’s four years from the time that everything started to slow down, and I think that prices have gone below the right level. It’s the right level to buy again.”
Dubai property prices fell as much as 60 percent from their 2008 peak, but have seen values rising in many premium areas across the first half of this year.
When questioned as to whether prices could regain the peaks of four years ago, Al Qassim said: “They might get higher; it all depends on demand and supply. We shouldn’t forget also that there is a normal price hike as a percentage of inflation”.
Al Qassim, who is also vice chairman of Emirates NBD and chairman of Emirates Islamic Bank, added that over 98 percent of Wasl’s 25,689-strong unit portfolio was occupied by end-2011.
Wasl is aiming to complete $844m worth of new projects within the next three years, and as earmarked Dubai’s burgeoning hospitality sector as a particular focus for growth.
Meanwhile, the managing director of Daman Investments, Shehab Gargash, also said that he believed that real estate now presented a real opportunity for investors, alongside sectors such as financial services and agriculture.
“People will look at it maybe a little strangely, but I think real estate will make a comeback in the UAE,” Gargash told Arabian Business.
“It’s the home of real estate in the region, more or less. I think the financial services sector will become interesting…things like agriculture in some of the countries around the region may [also] see investment.”
The comments come amid a spate of positive reports regarding the property sector in the UAE. Emaar, the country’s largest listed developer, posted a 146 percent growth in second-quarter net profits, buoyed by rents, and its retail and hospitality divisions.
Union Properties posted a $29m profit in the second quarter, as opposed to a huge loss for the same time a year previously. Nakheel, Dubai’s largest developer by assets, saw a 36 percent increase in profits in the first half to $209m.
Last month, a report from Bank of America Merrill Lynch claimed that Dubai property was a worthwhile investment, due to projected population growth in the emirate and strong existing infrastructure.
“The real estate sector provides a good exposure to growing consumer spending mainly led by tourism and sizeable household consumption,” the report stated.
“Dubai should benefit the most, in our view, given a more open and diversified economy, its greater sensitivity to continued population growth and superior past infrastructure investment.”
These "positive reports" are being based on the odd transaction, that may or may not be window dressing. Too many investors were conned in the past, which means a much better quality of information is required for anyone to get back in the fray. All the industry comments are self-serving, and therefore not to be taken into account when investing.
The market here is where it should be, I mean think about it, a 2 bedroom apartment will cost you around $600,000.00 for a region that has low labour cost and use cheap building materials, in most cases not even meeting the building requirements, shabby construction that will not last 10 years let alone the life time of the building!
markets like Hong Kong didn't return to their peak prices when their crashes occurred and Hong Kong is a much more viable market than Dubai. The markets may stop falling eventually and transaction numbers might increase, but returns to the peak prices of 2008 aren't going to happen.
Reality we should not forget. Dubai real estate market will take another 5 years to have a balancing position. we have seen so many people jailed in the past 4 years on "so called" defaults. Transperancy is a must for any economy , Dubai lack a lot in this.Price may come back to 2008 levels or much lower, it does not mean , it is a realistic or promising market.
Anyone who thinks that investors will pile into Dubai or that property prices will recover to 2008 levels within the next ten years, is living in a dream world.
They have to bring the Residency Visa Back to the Real Est Investing without Visa it is just not possible !
All the country have this law when you investing on Property why not UAE?
Never repeating the similar mistake, if you've made once before in Dubai property. Once beaten, twice shy...is the philosophy for anyone who have made such mistake in Dubai property investment. Don't dream too much...!
As far as no laws are implemented against contract breaches by deve,opers, no professional facility management companies are available, no protection laws for investors, cancelled projects investors are not compensated, service charges are dictated by RERA and developers, no HOA is registered, banks are jailing people for developers defaults or other strange things, no visa for property owners as it was sold in the bigining, why people should invest in Dubai? They better buy a property in Spain where it is cheap, protected by the laws, they are not sent to jail and can get a visa and even citizenship after 5 years. No competitive advantage for Dubai in the global RE world. They got everything wrong on purpose I guess
Real estate is a good oppurtunity as long as it is there for our coming generations, if somebody invests money in Dubai Real Estate, what is the guarantee that his children or grand children can have the right on that property when the investor himself can not be assured of permanent residency.
The stock market alone should be a lesson. Twice investors were taken to the cleaners in the UAE. Once in the stock market and then in the Real Estate market. The only time a market can correct and recover losses is when there is a huge local market demand by locals and the way I see it is that the UAE does nt have many locals as all are on visitor visas which means there is no major base and without a base there can never be a recovery or proper bounce. I think the heat is getting to some of these people being interviewed here.
This tax free thing is only for locals as they don't have to pay the fees that non-locals have to pay and if you these up on a yearly basis (per person) then the costs are a lot higher then other countries in which people have to pay taxes in. 3 year resident visa renewal in Taiwan is under $100 how much is it in Dubai? Homes in JLT have yearly DEWA fees of 25,000 Dhms. and up where in Taipei there are zero DEWA fees and the list goes on.