(DENNIS B MALLARI)
This year has been a dynamic time for the UAE’s and in particular Dubai’s real estate sector. There were regulatory initiatives that increased investor confidence; local developers successfully made the push outside the country’s and even the region’s borders; and environmental concerns came to the fore when the Dubai Government said all buildings constructed after January 2008 would follow the principles outlined by the Leadership in Energy and Environmental Design.
Despite the doom and gloom predicted by some property analysts, 2007 saw the gap between supply and demand widen, especially in the commercial segment, as economic growth attracted large numbers of transnational companies to set up offices and even headquarters in Dubai.
This increasing demand is expected to have a significant impact on the next year as well.
Emirates Business spoke to the heads of some the UAE’s most prominent developers to get their views on the seminal events that impacted the real estate sector this year, and their forecasts for next year.
Ahmad Al Matrooshi
UAE Managing Director, Emaar Properties
With the expected issuance of the Condominium Law and the strengthening of Dubai’s Real Estate Regulatory Authority (Rera), I think that 2008 will be one of the most robust years for the construction sector.
Several high-profile projects – including components of Emaar’s Downtown Burj Dubai – will be completed, which will partially meet the growing demand for property.
The seeds of this growth were planted this year, following on His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai’s announcement of the rent cap in the last quarter of 2006.
This was followed by the setting up of (Rera) to regulate the sector. The passing of the trust account law for developers further helped.
For Emaar, our flagship project Burj Dubai became the tallest building in the world.
Chief Executive, Nakheel
Even in one of the most vibrant and competitive real estate markets in the world, The Palm Jumeirah stands out as special.
On its launch in 2001, it put Dubai property on the international map. Therefore, the handover of the first phase of residences in 2007 was a huge milestone for both Nakheel and Dubai’s real estate sector. Where six years ago there was just water, you now have more than 1,500 families living. The premiums, which have reached as high as 300 per cent on initial prices, are a ringing endorsement of the desirability of the finished product.
For Nakheel, 2008 is very much about delivery. Reclamation on The World is on schedule and islands will be handed over to developers at the start of the year.
We will start to handover more than 20,000 apartments at Discovery Gardens, while delivery of more than 300 buildings at International City will be completed.
President, Tameer Holding
Abu Dhabi is Tameer’s next frontier of activity in 2008 as we see a tremendous shortfall in supply. The region is continuously attracting business to its shores and there is not enough office space available. Thus the construction industry has an impetus that will see development going strong well into 2009 and beyond. Apart from the extremely successful Cityscape exhibitions, the major events of 2007 in the UAE and across the region included the growth of other locations that are bursting on to the real estate map. We are seeing Oman, Ajman, Umm Al Quwain and even Fujairah beginning to leave their stamp on the region’s blossoming realty market, with huge commercial and residential mega projects. Also noteworthy is Sharjah and Abu Dhabi – where Tameer is working in conjunction with Sorouh Real Estate, in the development of its first mega project, The Shams. These are now beginning to take the spotlight off Dubai to an extent.
Chairman, Damac Group
We are extremely confident that 2008 will take Damac and the entire sector to new heights. We are looking to expand our geographical reach with plans to launch projects in India, Pakistan and North Africa next year. The confidence arises from the many landmark events that shaped the sector this year. The trust account law passed by the Dubai Government was one of the most influential of these events. This law, which we have been anticipating for a number of years, has impacted the real estate development market positively, and will help the market to mature.
All developers will be forced to deliver according to a firm schedule and this will lead to increased consumer confidence.
Also there were continual advancements in all realms of the regional construction industry. This has lead to record numbers of units not only sold but also delivered.
Rashid Al Nafisi
Chairman, Al Mazaya Holding
In 2008, the region should see the fruition of many real estate projects. Despite the rumours of an impending bubble burst, the industry’s growth is likely to be sustained. Despite the economic and political threats – both regionally and internationally – the year 2007 was important since it showed the industry was far from unstable. The creation of the region’s first property index was a historic moment, not only for Al Mazaya, but also for the GCC region as a whole. We now have the means to accurately monitor the industry’s progress, and not just rely on perceptions of the market.
Despite the record number of projects launched and completed, demand is not being met in the region. The development of luxury projects aimed at middle-income users, like our own Queue Point, will become increasingly predominant.
Saleh Nasser Al Sorayai
The general expectation for 2008 is that the current boom will continue and gain momentum. Construction is set to begin on several large projects and this should relieve the high demand for residential and commercial space. Demand, however, is also likely to increase, and it would be unrealistic to expect the supply-demand balance will be corrected within the next year.
One of 2007’s most significant trends was the move towards a greener approach in development. Environmental issues play a greater role in the planning and execution of new projects. For example, an in-depth study was done on the environment prior to the launch of the Sharjah Investment Centre.
We have also recently joined forces with Bee’ah’s recycling programme to minimise waste.
There were the positive steps regarding worker’s wages, which has long been a point of concern.