By Amy Glass
Market will balance out when more housing supply comes online in 2009, CEO says.
Real estate prices in Dubai will continue to soar until at least 2009 when a boost in housing supply with balance the market out, the chief executive of Omniyat Holdings said on Wednesday.
Mehdi Amjad rubbished speculation the market had become a bubble waiting to burst, citing strong buyer sentiment and the large number of people moving to the emirate.
“I don’t think property prices will drop or that the market will suffer a correction. There’s no reason for the market to adjust, we have a lot of people moving to the region, strong buyer sentiment and plenty of liquidity,” Amjad told ArabianBusiness.com in an interview.
Amjad said continued strong demand meant Omniyat Properties expected to quadruple the value of its property portfolio in Dubai to 21 billion dirhams ($6 billion) this year, after it doubled sales in 2007 year-on-year.
He said the company reached sales of just over 3 billion dirhams in 2007 compared to 1.5 billion dirhams in 2006.
The firm will deliver both its 507 million-dirham One Business Bay and 245 million-dirham Bayswater tower projects in 2008, and will launch projects in Abu Dhabi, Bahrain and Saudi Arabia, he added.
Amjad said the increase in housing supply would also stabilise inflation, which hit a 19-year high of 9.3% in 2006, the last official figure.
Property prices in the emirate shot up around 20% in 2007, and could rise a further 5-10% this year due to the supply shortfall, Egyptian investment bank EFG-Hermes has predicted.
Amjad said certain exclusive developments had seen prices increase more than 100% in the last two years. He said the rise was unhealthy for market sustainability.
Many analysts have highlighted the shortage of housing supply as the main driver of inflation in the UAE.
Amjad also said the Gulf real estate market would not be hit by the recent slowdown in the US economy.
“The US slowdown has been a blessing. We are seeing more US funds and institutional investors looking at the Middle East for investment opportunities due to the weakness in their own market,” he said.
UAE Economy Minister Sheikha Lubna Al Qasimi said on Monday soaring growth in the Gulf real estate sector may not be sustainable in the wake of a global market slowdown, warning global issues had to be monitored closely to address risks posed by a lack of liquidity.