Dubai property market still feeble, but hopes emerge

Wednesday, 6 October 2010 19:02 - - {{hitsCtrl.values.hits}}

DUBAI (AFP): Dubai faces an uphill struggle to revive its real estate sector that was battered by the global financial crisis, but industry reps at a subdued property fair in the once-thriving emirate see signs of hope.

At the prestigious Cityscape show -- an event celebrated over the boom years for rolling out grandiose developments -- major property developers displayed models of projects already completed and others that might never rise off the ground.

“For the Dubai developers, the key focus this year... is delivery and completion,” said Rohan Marwaha, Cityscape’s managing director, ahead of the four-day show that opened on Monday.

The four-day show has seen the number of exhibitors fall and its size reduced for the second year in a row.

Property in Dubai has shed more than half its value since peaking in 2008 as the financial crisis dried up cash inflows and led many to walk away from their loss-making investments.

And prices are likely to continue falling for the rest of 2010 due to oversupply, property consultancy Jones Lang LaSalle said in a report this week.

But it also said the pace of decline has eased compared with last year.

“This excess supply is dampening sentiment and delaying the timing of any general market recovery,” the report said.

The firm expects some 35,000 new residential units to be completed in 2010, in addition to 30,000 more in 2011, while seven million square feet (650,000 square metres) of office space are likely to be ready by the end of this year.

But while demand remains subdued as speculators, who fuelled the property frenzy over five years, are kept away by the cash shortages, some voices in the industry are starting to question the supply forecasts, saying that a lot of the projects will not be completed.

“There will be a 90 percent reduction in supply until 2020 from the peak of registered projects in 2008,” Sheikh Maktoum bin Hasher al-Maktoum, the president of Al-Fajer Properties, told AFP.