The outlook for the real estate market in Dubai is becoming more positive despite the debt problems facing Dubai World and its developer subsidiary Nakheel, it is claimed.
Other developers are pointing out that they do not have the same debt problems and they are looking ahead expect the economy to recover from the downturn by 2012 which will see property improving again.
‘It usually takes five or six years to recover from a downturn. Judging by this, I believe a recovery in Dubai should come by the end of 2012,’ said Shaikh Maktoum Hasher Maktoum Al Maktoum, CEO of Al Fajer Properties.
Abdul Majid Esmail Al Fahim, chairman of Dubai Pearl, also expressed confidence in Dubai’s economy. ‘History shows every country has its ups and downs. Dubai is a classic example of how a state can build so much in such a short time,’ he said.
Al Maktoum added that he does not see Dubai World’s debt repayment restructure as a concern. ‘These companies are facing challenges. They have huge amounts of debt and are thinking of the next step. I would try and see how I could pay my debtors in the most practical way possible. America pays its debts over 10 to 20 years. For us the problem is maturity. Dubai World’s debt is due in a short period of time,’ he explained.
Meanwhile they add that the fact that prices in some property sectors are increasing is a positive sign for recovery. Villas have been performing better than apartments in recent months.
Growing demand for family homes in Dubai by current residents has pushed up prices, a trend that could continue as analysts are predicting a shortage of villas in 2010.
In the near future, Al Maktoum believes that Dubai has to focus on settling its debts and rebuilding its reputation and finishing a product is one of the most important aspects for investors. ‘When our offices were nearing completion, their bidding price jumped by 30%,’ he said.
‘Even though prices are down 50% from their peak, the market will adjust; it has gone through this cycle several times. The situation is not unique to us. It’s a global situation,’ commented Al Fahim.
Some have seen prices start to bounce back. ‘The fall in the price of villas seems to have bottomed out and we are starting to see prices rise again. Since July prices for villas in Victory Heights have risen by about 20% and we expect to see prices stay around the same figure to the end of the year,’ said Yasser Abdulrahman Al Raee General Manager at Victory Heights.