Speculation about the bubble bursting in the Dubai real estate market owing to oversupply has led to concerns by overseas property investors. In 2010 the number of homes in the region is set to double to 530,000. The commercial sector is also expanding at a rapid rate with office space set to triple, so who is going to buy all this real estate? Dubai Property Executives explain how Dubai is as good as it gets with a huge future for investors in Dubai property.
Recent interviews with some of the most influential leaders in Dubai real estate reveal a completely different perspective. The July 07 edition of Estates Gazette Magazine www.estategazettesgroup reports on the views of executives from Jones Lang Le Salle, Nakheel and Dubai Properties.
Nakheel Chief Executive Chris O’Donnell ‘People do get a little concerned about Dubai, thinking we are just building and hoping we will sell the product on completion. But we sell product prior to starting construction. Everything you see at Palm Jumeriah has been sold” The Australian born CEO goes on to explain that his company will not commence a project until it has reached a threshold percentage that gives them a cash flow to enable them to build.
Property Developers Dubai Properties Chief Executive Mohammed Binbrek “We do not begin until the units are sold and then we ask for a 70% deposit.” When asked if he thought the Dubai market would crash with so much construction he replied “ Around 40% of the population is under 20 add this factor to a population that is growing it implies much more houses.
Jones Lang LaSalle executive Mark Thomas specialises in the residential market his response to worries concerning over supply was “We are asked that every day the answer is that demand from overseas is still coming. What has happened is price appreciation has slowed from 30 to 40 per cent to 10% per year. Land sale prices are holding up and are active”
Nicholas Marr CEO of international real estate portal Homesgofast.com “Dubai remains an exciting place to invest with huge potential. The market is no where near its peak; you just need to see what is planned for Dubai. A new giant airport, the worlds tallest buildings, a business area bought out by multi national companies, the worlds first sports city, theme parks set to challenge Disney in Florida to name but a few. International investors have largely paid cash for their Dubai Property and this makes them more resilient than in most markets.”
The current rental yields on Dubai real estate are high by global standards at 7-10 per cent which reflect the fact that this is a new and immature market. In the long run a return to rental yields more in line with comparable international markets should be expected.
