No 'big' Dubai property market correction

Sobha, in a joint venture with Meydan Group, is developing 'Mohammed Bin Rashid City - District One', a mixed-use project in the Mohammed Bin Rashid City. (Supplied)

A 'significant' price correction in Dubai’s real estate market has been dismissed this year by a senior executive of Sobha Group, which is involved in building two mega developments worth Dh48 billion ($13.10 billion) in the emirate.

"Dubai is not going to see any significant price correction though the real estate market has been moving sideways in the past few months," company Vice-Chairman Ajay Rajendran told Emirates 24|7 in an exclusive interview.

Sobha Group will commence construction in the second quarter of 2015 with the handover of its first units in the Hartland project commencing in 2017. (Supplied)

“People are continuously being attracted to the emirate. Though people may come with a six-month to one-year time horizon, they tend to extend their stay when they see what the city offers - the conveniences, comfort, security and opportunities.

“So why should someone say there is a ‘big’ correction around the corner if your apartments and villas are being occupied by users.

“The economy is too encouraging growth with population growing consistently by 5.0 to 5.5 per cent every year. We believe that is enough to manage the supply expected in the market.”

Data released by Dubai Statistics Centre shows the non-labour population jumped by over 7 per cent in 2012 and 2013, while the number of households grew by 7.6 per cent in both years.

In 2015, nearly 20,000 to 25,000 new units are expected, though the ground reality has been that the market has never seen the actual supply matching the estimate.

Softening overdue

Rajendran, however, stated that price stabilising was timely.

“Prices had gone down below replacement costs and had to recover. We saw prices recovering 50 to 60 per cent in the past three years and so the stable prices that we are witnessing today is timely. ”

Is the market softening affecting sale of luxury properties?

Rajendran does not believe so.

Sobha Vice-Chairman Ajay Rajendran. (Supplied)

“We are in a phase where there still are transactions happening, we are still seeing value buyers writing cheques, end users writing cheques and fewer speculators writing cheques. So in many ways it is a more maturing phase of the market,” he added.

Earlier this year, JLL, a real estate consultancy, said prices could decline by five to 10 per cent in 2015, with Standard and Poor’s Ratings Services too stating prices to soften in the secondary market as well.

Project handover

Sobha Group will commence construction in the second quarter of 2015 with the handover of its first units in the Hartland project within Mohammed Bin Rashid Al Maktoum (MBR) City in 2017.

The Hartland International School, however, will open in September 2015.

Launched in July 2014, the mega development comprises villas and apartments along with two international schools, nurseries, three hotels, mosques, a clubhouse, retail community centre and restaurants.

New sales offices

Rajendran disclosed the company would be opening five overseas sales offices to attract new investors in the coming months.

These offices will be located in London, Singapore, Riyadh, Doha and Kuwait City.

“Our target is to sell our Dubai projects but the short-term focus will be on Hartland.

“We expect the new offices to play an important role in reaching Sobha’s name to the overseas market and enable us to inform investors on the kind of projects that we are doing in the emirate,” he added.

The company, in a joint venture with Meydan Group, is also developing ‘Mohammed Bin Rashid City - District One’, a mixed-use project in the MBR City.

The project consists of 1,500 luxury villas, a 350,000sqm water park and the world’s largest crystal lagoon with man-made beaches, retail and leisure zones, and sports attractions.

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