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Wed 9 Oct 2013 02:38 PM

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New Dubai price bubble unlikely, says top property exec

Jones Lang LaSalle CEO says risk of artificial real estate bubble is limited due to market maturity

New Dubai price bubble unlikely, says top property exec
(AFP/Getty Images)

The risk of a new property price bubble in Dubai is "limited" as the market becomes more mature, a senior Jones lang LaSalle executive said on Wednesday.

With price rising up to 30 percent over the past year in the emirate, concerns have been raised that the market may be heading for an artificial bubble similar to 2008 after which prices crashed more than 50 percent, triggering a corporate debt crisis.

But Alan Robertson, CEO of Jones Lang LaSalle MENA said in a statement that this was unlikely.

"With just weeks to go before a decision is announced, speculation around Dubai's bid for Expo 2020 continues to contribute to a prevailing sense of positive sentiment concerning the city's real estate market.

"While there has been concern over the possibility of another residential property bubble, and Dubai is as ambitious as ever,we believe these concerns are limited. We are seeing a more mature and considered approach which is only going to benefit the long term health and credibility of the real estate sector," he said.

He added that the broad based recovery in the residential sector was resulting in price and rent increases across most areas.

"Unlike last year, the fastest growth is now being experienced in mid-market and affordable projects and there are signs that the rate of increase is slowing in some high end locations," he said.

Jones Lang LaSalle said that while there were few significant commercial real estate transactions in Q3, there remained active demand for residential and hotel investments market across Dubai.

Robertson added: "While the retail, hotel and industrial segments continue to experience solid growth, the recovery of the office sector remains more selective and concentrated in the prime segment with the large level of supply and high overall vacancy rates depressing rental pressure elsewhere."

Craig Plumb, Head of MENA Research for Jones Lang LaSalle, also added: "Recent data continues to be relatively positive, confirming the stronger outlook for the Dubai economy. This has resulted in more positive sentiment towards the Dubai real estate market over the past three months.

"While there is no doubt that the real estate market is currently recovering, this recovery is currently uneven, with concerns remaining about the level of existing vacancies and future supply (particularly in the office market), and the continued reliance of the residential market on demand from investors rather than end users".

Last month, Standard Chartered also said Dubai's housing market was growing on the back of improving fundamentals with low off-plan sales.

It said the improvement in real estate prices - reportedly up by more than 30 percent for apartments over the past year - was not caused by speculators in the market.

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Geko 6 years ago

Possibly he is talking about Real Estate (properties) maturity, but not agents and broker's or freaky rollers of those properties.
Anything, for premium at a over supplied market, heading towards bubble. Time for Economics 101.