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Sunday, Feb 02, 2014
DUBAI`S REAL ESTATE GROWTH CYCLE HAS JUST BEGUN: DI CEO
Type : Article   |  Source : Emirates24/7

The growth cycle in Dubai's real estate market has just begun and prices are still far below the peak of 2007-2008, Dubai Investments Chief Executive Officer Khalid bin Kalban told Emirates 24|7.

"Prices fell from the peak of 2007 and 2008 by a maximum of 60 per cent and a minimum 40 per cent; we even haven't reached that 40 per cent. Though we have seen increase of up to 20 per cent, we haven't really come back to the value of 2008. Generally, it's a five-year growth cycle... we are just at the start of the first year and so you still you have four years of growth," he states.

“The world economy is just picking up and financial markets are growing... usually there is 12 to 24 months gap between the growth of stock markets and growth in real estate. And if you go back, you can see that the stock market crisis started in 2006, but the real estate market crashed only in 2008.

"So we are confident that in the coming three to five years we wouldn't see anything affecting this growth... all indications tell us that growth is sustainable," Kalban asserts.

US-based Goldman Sachs Group said earlier that fears of Dubai's real estate market experiencing a bubble are "exaggerated", stating property prices were still 36 per cent below their 2008 peak even after rising by about a-third from a low in the second quarter of 2011.

Knight Frank, UK-based consultancy, expects property prices in Dubai to increase by 10 to 15 per cent this year with the emirate being placed third in the list of world's 20 most dynamic cities.

Shortage of housing units

According to Kalban, Dubai Investments Park (DIP), a 2,400-hectare mixed-use development, is already currently facing shortage of residential units.

"There is a severe shortage of residential units in DIP and we are looking to build more to meet the demand. Even those who rented land from us earlier, and were planning to build commercial buildings, have now opted to covert them into residential.”

DIP is a wholly-owned subsidiary of Dubai Investments, the largest investment company listed on Dubai Financial Market.

Even though DIP isn't located in any close proximity of the most happening districts of Dubai, property prices and rents almost match that of other master communities.

"There is definitely a huge shortage here and hence prices and rents are going up," Kalban states.
Average rents for two-bed apartments in DIP are Dh75,000 per annum, while three-bed are between Dh110,000 to Dh120,000 pa.

New villa project

In fact, increasing demand for villas has led to Dubai Investments to add a new phase to its popular Green Community.

"We will soon be launching the phase three of Green Community. Construction will start as soon as we get approval from Dubai Municipality," he reveals.

Ritaj sold out


Asked about Ritaj, the flagship residential project of Dubai Investments Real Estate Company (DIREC), the real estate arm of Dubai Investments, Kalban says it is nearly sold and leased out.

"Ritaj is nearly sold and leased out. The units that remain unoccupied are ones sold to investors."
Though Dubai Investments held back some inventory in the project, which has been leased, it now plans to sell their retained stock in the market.

"We had held back some inventory that we had opted to rent as we did believe its value would definitely go up. Prices are going up and hence we are activating the sale of these units based at the new prices."

The current sale price ranges between Dh700 to Dh800 per square feet. It had fallen to below Dh500 per square feet between 2009 and 2010.

"People who have built residential are also seeing not just their rentals going up, but also the value of their buildings. The area, overall, witnessed an increase of 15 to 25 per cent between June 2012 and end of 2013.”

Hotel with a spa

Kalban rules out plans to build any mega shopping mall in Dubai Investments Park, saying, “All the residential communities have a small retail component… there are schools, shops, nurseries, hotels, etc and hence they are self sufficient.”

But, there is a one thing that DIP does need - a hotel with a spa.

“We are exploring options to build or lease the land to some third party willing to build a hotel with spa, but if no one comes up in the next six to 12 months with any offers, DIREC will start work on the project,” he reveals.

Author : By Parag Deulgaonkar - www.emirates247.com
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