“The growth of UAE real estate must not be based only on developers profitability and short term capital gains. If UAE and Dubai want to be competitive in terms of making it the preferred home for new population they will have to see the entire social economic picture in its entirely.”
Gulf Property: What is your view on the real estate market in 2015?
The year started steady but clearly investor sentiment was cautious due to the global economy challenges. End user kept the market moving. But the fall in oil prices and the currency fluctuations have had a major impact on the cost of Dubai real estate for most foreign investors resulting in less buying power. The moderate decline of this year’s UAE GDP compared to the last year have also caused a declination in the volume of real estate transactions in Dubai. Though the UAE government and specifically Dubai government commitment on infrastructure development and growth ensured Dubai real estate looks good in mid to long term. There are factors to be considered including Yemen and Syria conflict and other economic trends globally.
Gulf Property: What were the challenges faced by the sector?
The main challenge is the impact of economic turbulence happening globally. From the Chinese economy slowing down to the markets volatility worldwide and slow growth in emerging markets all have an impact on Dubai and poses challenges in local realty.
Gulf Property: What is the outlook for the real estate sector for 2016?
If the oil glut comes to an end by 03 of 2016, we shall till that time see softening of prices and rents. However some prime locations will perform steadily.
But by the 4th quarter of 2016 we shall see some gains in the real estate sector subject to recovery of oil prices. Oil has a major impact on regional economy.
Gulf Property: What do you suggest government or regulators do to stimulate the sector?
The government must continue to focus on infrastructure growth. Maybe right now would not be a good idea to introduce things like VAT or increased registration fees. Another thing that the government must regulate in order to see steady real estate growth and profitability is to keep a 360 degree view of the entire socio economic spectrum.
Check on inflation and control on things like education and health fees, keep things friendly and warm for new comers. Ensure security is never compromised and make business easy for small enterprise. Cost of doing business should be brought down and reconsider residency rules for freehold property owners.
Gulf Property: Do you think the government should incentivise the affordable home segment?
A balanced society is made of all segments. The lower income bracket, middle class and the rich. Dubai has mostly seen a focus on high end development with very limited choices of middle income and lower income housing sector.
In places in Dubai we see people sharing villas and living in almost labour camp kind of environments. If we have a more thriving lower and middle class family structures will ensure an over all economic growth across multiple sectors.
Gulf Property: Do you think, relaxing the mortgage sector to off-plan, affordable home segment could stimulate the real estate market?
Well that should have an impact but you need people to be ready willing and able to fulfill a mortgage commitment.
Things need to be made realistic. The entire living in Dubai experience needs to be doable. to a new young lower and middle income families.
Gulf Property: Do you think the developers would bring the freehold prices to below Dh300,000 for a studio?
In countries around the world and some developed countries you can find a studio for as little as $30,000 and you can find .three to four bedroom houses in suburbs for as little as $80,000. So we need to see that a person with $100,000 can come with his wife and 2 children and own a liveable practical home. So developers should try to unlock this segment.
For which of course government will have to offer affordable land. The growth of UAE real estate must not be based only on developers profitability and short term capital gains. If UAE and Dubai want to be competitive In terms of making it the preferred home for new population they will have to see the entire social economic picture in its entirety.