Some expats in Dubai are worried about the speedy increase of Dubai property prices. Some freely discuss their concerns on the radio and with representatives of the local media. Emaar’s chairman Mohamen Alabbar, however, is not. According to him, the current situation is actually quite “healthy” for the emirate.
In a most recent interview on the sidelines of Cityscape Global 2013, Alabbar shared his opinion that people are greedy. Also, he explained that it was namely this greed that often leads to mistakes, like the 2009 property crash in the city. But if people are greedy, what about companies and namely – property developers? For example, the number or projects could be limited by quotas, licenses or long term sustainability plans.
Emaar’s chairman said that mistakes cannot be avoided sometimes and this is true. Making mistakes is part of human nature, but we must also realize how to prevent from the same things to happen again. Mr. Alabbar said people should first learn from their old mistakes.
Latest real estate reports have found that residential house prices in the city are still rising. According to Jones Lang LaSalle (JLL), prices will soon hit an unsustainable rate. JLL also predicts that there will probably be a price correction in the coming months.
Over the last twelve months, prices of houses have increased with about 22%. That is actually the highest jump recorded in established markets. According to JLL, this is due to the fact that the government has invested billions of dollars in various real estate projects. That has lead to initiating a buying spree.
The forecasts are positive that the growth of residential prices and rents will continue in the next year. However, the rate of increase would likely slow down. That will be partly due to the large amount of speculative buying in Dubai.
Nevertheless, Mohamed Alabbar is certain that the 2009 scenario will not repeat. According to him, Dubai has learnt its lesson. For him, banks are not lending so easily today. In addition, Emaar’s chairman points that all government regulations are now carefully monitored and modified.
Mohamed Alabbar believes that the property market surge in Dubai in unavoidable. He also reminds that this is not the only sector in the emirate that is quickly developing today. Other industries like travel, tourism, retail, education and trade are growing as well. In fact, Alabbar states that they are actually influencing the property market in the city. Mohamed Alabbar is also attributing the sector’s rise to the fact that it is trying to catch up after the 2009 crash.
Finally, Alabbar commented that investors and developers should not feel alarmed by the surge. Instead, they should continue to start new projects and launch new developments.
Emaar seems to follow this development strategy. In 2012, the developer was among the most active in Dubai and it launched a number of new real estate projects. Only a day ago, at Cityscape Global, Emaar relaunched The Lagoon project. Many other companies also relaunched shelved developments. Time will only show if all of this projects will materialize and when.