By Lubna Hamdan
Naguib Sawiris said Dubai real estate should pause construction for 2 years to see market recovery
Egyptian billionaire Naguib Sawiris, who has investments in sectors ranging from development to telecoms and logistics, said developers in Dubai are "punishing themselves" by pushing more units into the market.
Speaking to Arabian Business, the executive chairman and CEO of investment conglomerate Orascom Investment Holding (OIH) said developers in the Gulf city need to "take a breath".
He said: “You can argue the developers are punishing themselves because they’re the ones pushing the real estate. They need to take a breath. [Dubai is] here to stay for hundreds of years. The Emirates is the best country in the whole Middle East in terms of stability, freedom, righteousness, rule of law.
“In democracy maybe no, not really in democratic terms, but people are not complaining there because their life standards have evolved to be magnificent. Life is splendid, everything is available, organised, and clean; traffic is manageable, airports are amazing, their infrastructure and IT and all software they’ve implemented is state of the art. So they should be proud of what they have created.”
In order for the market to cover, Sawiris said Dubai real estate should pause construction for 2 years.
He said: “They [Dubai] should, in my opinion, make a moratorium on construction for two to three years in real estate. Put a moratorium, no more licenses for two years - one year at least - until the overload in the market goes on… They need to cool down, in a decent way, not the ones who are in the middle of construction to stop him, but they should not issue new licenses for one or two years. This will help the market.
“In real estate, you need to create an element of scarcity. It’s very simple. When you keep on constructing, constructing, constructing, you’re pushing the market beyond its limits. People who are buying real estate want to see appreciation. How can they see appreciation when you’re pouring more and more units into the market and there’s a limit to your infrastructure?”
Sawiris’ remarks echo those of leading developer Hussain Sajwani. In October, the chairman of Dubai-based Damac Properties called for a temporary end to new construction in the emirate in a bid to address over-supply issued.
Around 30,000 new homes will be built this year in Dubai, twice the demand in the Gulf city, according to estimates by property broker JLL, despite property prices continuing to fall by around 30 percent compared to their peak five years ago.
In an interview with Bloomberg, Sajwani said: “All we need is just to freeze the supply. Reduce it for a year, maybe 18 months, maybe two years.”
Damac has dramatically reduced new sales in the past two years and will focus on selling the properties in its inventory, Sajwani said. Still, the developer will complete 4,000 homes this year and another 6,000 in 2020.