Only 10% of 2008 projects will be delivered by 2020

A maximum of 10 per cent of the 1,280 projects announced in 2008 in Dubai will be delivered till 2020, believes a top real estate developer.

"I believe there will be a 90 per cent reduction from the original planned supply into the market by 2020, which is a positive thing for real estate prices," Sheikh Maktoum bin Hasher Al Maktoum, President, Al Fajer Properties told delegates at the first Menares conference.

Sheikh Maktoum said prices were "bouncing near bottom", but the realty market was witnessing a strong uptake. Rental yields, according to him, were currently hovering between 8 and 10 per cent.

"Rental yields tapered off quite aggressively during the downturn, but are now in the stabilisation phase."

The collapse of Lehman Brothers, Sheikh Maktoum, said triggered price declines across the global realty sector and in Dubai.

"Dubai was considered as haven as realty prices kept creeping up with people actually making money... but once Lehman collapsed Dubai's financial umbilical cord was severed from rest of world.

"We have started seeing an upward movement because developers and customers are no longer willing to sell at those low prices... most customers who were desperate to sell have either sold or defaulted."

Emphasising that Dubai has a sophisticated and robust infrastructure in place, he said that the emirate has delivered on most of its promises.

"The cost of building primary infrastructure is very high and you can see where the money has gone... even the secondary infrastructure is there. Dubai has managed to deliver mostly on its promises."

According to Sheikh Maktoum, developers whose projects have not yet started or completed need to follow the three 'Rs' - restructure, redesign and resell.

"Some projects are not feasible in the current form and they need to be redesigned and re-launched at some point in the future."

He advised overhauling of immigration laws of the UAE to make it more investor-friendly.

"That aspect gets complicated in the Middle East since one has to take into account a lot of security and geopolitical considerations, but I believe great strides have been made. Dubai has been a leader in this field and will continue to be a leader."

Sheikh Maktoum called for consolidation between free zones and their managements and board to govern all free zones so as to get some standardisation across them.

"It is always the darkness before the dawn and that is what I believe in. I am very confident that things will improve drastically from what they are today," he added.