'Inflation won't hit realty demand'

Mohamed Ali Alabbar (SUPPLIED)

Emaar Properties chairman Mohamed Ali Alabbar yesterday said that soaring inflation in the UAE unlikely to hit demand for real estate in the second-largest Arab economy.

Inflation in the UAE probably soared to an at least 20-year peak of 11.4 per cent last year from 9.3 per cent a year earlier, according to a Reuters poll last month, as rents and food prices jumped.

"It will not impact [demand] because it is a global phenomenon," Alabbar said on the sidelines of a news conference in response to a question regarding the impact of price rises on property demand.

Property prices have been soaring in the UAE as supply fails to keep up with demand. Dubai kicked off the property boom when it first allowed foreigners to invest in properties in 2002.

Emaar posted its second decline in profit in three quarters in April as revenue stagnated and marketing and selling costs rose.

Alabbar said at the time that Emaar was operating in a very challenging economic environment.

Inflation has been hitting record or near-record peaks across the world's biggest oil-exporting region, where most states peg their currencies to the ailing dollar, driving up import costs.

Rents have been a leading factor in inflation, rising across the country even as many of the UAE emirates – including Dubai and Abu Dhabi – set caps on rental increases.