By Andy Sambidge
Real estate big-hitters say affordable homes are key to boosting Dubai market.
Real estate chiefs in Dubai on Tuesday outlined their vision for the future as the industry attempts to recovery from a dramatic slump during the past four months.
As a new report by international property consultants Colliers revealed that house prices in the emirate fell by eight percent during the last quarter of 2008, members of the Dubai Property Society's (DPS) insisted the real estate landscape was "positively changing".
A trend towards reverting back to fundamentals, the creation of affordable housing and the changing of mindsets - a move away from short-term prospecting towards long-term equity investments - was crucial to the future of the sector over the next two to three years, the Society said on Tuesday.
"It's back to the basics for 2009 as the remaining liquid investors flock to traditional investment instruments such as direct investments and ownership of real estate,' said Blair Hagkull, managing director in the Middle East for Jones Lang LaSalle.
"I think 2009 will be a majorly transitional year for the sector; things will improve gradually in 2010, but by 2011, I expect the sector to be stabilised and matured in terms of return of investments, affordability and regulations."
Ronald Hinchey, the resident partner of property consultancy firm Cluttons - also a member of the Society - added: "Although it has a relatively short history, the real estate sector in Dubai has experienced growth rates far exceeding those almost anywhere else in the world.
"The expensive, impressive developments seen throughout the city were acceptable until now; however, the new challenge facing Dubai is bringing affordability back into the market."
Speaking about the role of RERA, he said: "We will see more corrections and regulations, and I think RERA is doing a great job so far. Through 2009, I think the focus will be on solving disputes between end-users and developers, and I believe that RERA should and will continue to enforce a fair game for everyone's benefit."
Iseeb Rehman, managing director of Sherwoods, stressed the importance of changing the mindsets of investors in terms of asset values, adding: "I am a strong believer of brands. I believe that real estate companies, which enjoy good reputations and have a respectful track record will survive the crisis.
"Therefore, companies should now focus more on professionalism, quality and innovation in 2009. I think that the current financial crisis will help the real estate sector come of age; we will see a shift back to fundamentals with a focus on quality and affordability."
Naaman Atallah, chief operating officer, Emaar Properties, said: "Developers must concentrate their energies on their projects, build a positive outlook and continue to inspire confidence in the economy."
I have one word for you....MORTGAGES! (enough said)
that is waht we say long time back, please build cheap and reasonable and affordable housing to meet the requirements of middle class , but unortunately, all construction was built on fantasy and Extravagance, so all of us has to pay the price of that fantasy.....please do not expect that the real estate market will come back booming unless you are living in another planet
At last someone has seen the light. The readers of Arabian Business have been clamouring for affordable housing for months now! Finally, people in positions of power have seen the writing on the wall. The blindfold of greed has been stripped away, I'm guessing. Now I hope that these big-wigs, in collaboration with RERA (whom they extol as doing such a great job), will lower the rents of already existing properties in order to bring more affordable housing on the market quickly. Lets be honest - its not like the units of International City or Discovery Gardens are of the highest grade or quality and therefore costly to build. Lets get back to the basics, indeed! Let the people who manage to hang on to their jobs, be able to AFFORD to stay in Dubai. And - do I dare say it - actually be able to save some money in the process? Just remember - if a person feels like they are in a comfortable position, they will spend more and inject more cash into the system. Fingers crossed that all this will come to pass!
I think the developers of high end appartments and developments should lower thier maintainance charges as these charges are exorbident, when compared to Sharjah and Ajman. This will benefit the investors who inturn will reduce the rents of their appartments, which inturn will decrease the inflation in the country. Another problem faced by the investors is VERY VERY HIGH MORTGAGE RATES. when compared to the other parts of the world, the mortgage intrest rates in dubai are quiet high when compared to the rest of the world. I think if the intrest rates are brought down, this will lead to less EMI's for the investor, which inturn will lead to fall in rents. So in my opinion. LOW MAINTAINANCE & LOW MORTGAGE RATES are key factors for affordable housing.
Well, drop of 8% is hardly dramatic! Time they realize it would be a lot better to be more transparent than eye washing with unrealistic reports!!
The same people who claimed dubai wont see correction, let me re-state, CORRECTION till mid-2010 are saying the market will be back by 2011. I think its about time, people didn't trust these people and analysts. Because as we have the market CRASHED IN NOV 08'... Laughable.
I am living in a 3bdr Villa in the Lakes and am paying close to 300k. These villas are now worth over 300k. I fail to see how the rents will decrease especially with villas. They may be decreasing in areas like intl city etc. where it is not that convenient to live with a family of 4. The greedy owners will continue to be greedy as long as the demand outstrips the supply. In addition, people can't buy now so they are going to rent. Let's face it, it is becoming increasingly difficult to live well in Dubai now so some of us will have serious decisions to make. Look forward to another shitty year of paying exorbitant prices in Dubai yay !
The big projects and luxury housing was built for some who had some who had a real vission missing. The middle class and residents of the UAE and some from the GCC would be the end users and not customers from NZ or UK, they go to Spain and the Bahamas!! A lot of unprofessionals entered the market and some are being kicked out, all they did was develop unrealistic projects and never challenged them by the owners. The laws til today have not been fully developed to cover every aspect of the real estate purchase until possible disputes, banks also contributed by taking advantages of the rates, nowadays a house loan should not exceed 4 to 5 %. Finally what is the longterm plan for an expat to buy freehold and get semi-permnant residency but there obstacles such as job secuirty, inflation, and nationalization of the work force. Once the real estate market isn unified across the board and in all cities then we can have a clear option to buy or keep renting and walk away
Reading all the comments, it is clear that word 'Affordable' is the 'Mantra' Dubai has to adopt. I am here in Dubai for 22 years. Back then in the 80s and 90s the best place to live for the working population was Karama, because of the affordable homes and affordable shops. The majority of Dubai residents used to go there for their daily needs or daily eats. What Dubai forgot are these roots that made Dubai what it was - a place for the hardworking and where their contribution was appreciated by those who mattered. Now this population is pushed to far off places like Ajman, beyond, and out of the country. If Dubai wants to develop as balanced society, you have to build a 'Karama' near Marina development, Jabel Ali, jabel Ali Airport, etc. People who live there will re-make Dubai to it's old glory. The quicker they realise this, it is better for this truely great place on earth.
This is something that is seen also in US & India recently. India's #4 exporter of software services Saytam Computer Services Chief has admitted to fraud of over a $150 million and is currently in jail.