Dubai realty in healthy phase. Weekly Dubai real estate news digest. Issue 84

Dubai realty in healthy phase
Welcome to the eighty-fourth issue of Market Insight, your weekly guide to what's happening in the Dubai real estate market.
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MARKET INSIGHT. Weekly guide to Dubai's property scene
Issue 84 |  February 8, 2015

Dubai realty in healthy phase

In 2013, Dubai saw prices and rents rise considerably in a fashion that was reminiscent of the city's economic boom in 2008. However, the quick growth sparked fears of an imminent bubble and as a result, there was a marked slowing down in 2014. Now, as we enter the new year, growth has come to a staggering halt.

Most analysts agree that this was absolutely necessary to ensure that the market doesn't face negative consequences. Caution needs to be exercised as the emirate's economy is now under threat with continuing falls in oil prices and the fact that there will be a 3% annual increase in new property projects over this year. Meanwhile, there is no signs that this will be matched by increases in the population at that income level. 

While there's undoubtedly a greater self-awareness among players in the sector, developers show no sign of slowing down their growth. Arabtec recently announced that it won two contracts worth AED375 million from Emaar Properties to build over 1,000 town houses and villas in the Mira community and at Arabian Ranches. Meanwhile, a recent report by Meed revealed that contracts worth $27 billion were awarded in Dubai over a span of just 10 years as the emirate gears up to host the Expo 2020. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While Dubai still has some lessons to learn, there's no doubt that the market is now healthier. Investors are being drawn by the dozen to the new mega-projects the city announces and regionally, the emirate has become the capital for economic activity. As Chairman of Damac Properties Hussein Sajwani put it: "Be it in terms of long-term political stability, currency stability, open rules and regulations, immense growth potential, excellent infrastructure, zero tax, number one airport in the world, logistics, quality of life, which city can replace Dubai today?"


Pashma Manglani


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'No market comparable to Dubai'

No international property market is comparable to Dubai, according to Hussein Sajwani, chairman and chief executive of Damac Properties.

Speaking to Khaleej Times, he expressed his confidence in the market. “We are in a very healthy phase in the property cycle. After a 25 to 30 per cent upswing in prices and rentals in 2013 and 2014, we are now in for two years of healthy growth and market stabilisation. If we were looking for another period of 30 per cent price growth, it would have led to a bubble,” he said. “Single-digit growth in sales prices will be the norm going forward."


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Arabtec to build 1,000s of new villas

Arabtec has been awarded two contracts worth a total of AED375 million from Emaar Properties, The National reported. 

Arabtec said that its Arabtec Construction subsidiary had won a AED209m contract to build town houses at Emaar’s Al Mira Residences in Dubai by May next year.

A company spokesman said that the new contract was separate from the AED1 billion contract that Arabtec and Emaar announced in March to build 1,582 town houses at the Mira community, the first phase of Emaar’s master development Reem.

It also said it had won a AED166m contract to build more villas at Emaar’s nearby Arabian Ranches extension by March next year.


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'Caution vital for UAE realty market'

Caution needs to be exercised in the real estate market, says Paul Preston, regional head at IP Global, a specialist real estate advisory. 

He notes that on the macro side of things, the continuing fall in oil prices cannot be ignored. Meanwhile, on the micro front, there will be an annual 3% increase in new property projects over this year and the next two - something that will not be matched by increases in the population at the mid- to high-end salary bracket. 


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Construction sector continues to boom

Dubai developers have stepped up their game, announcing a huge number of mega developments in the past two years, Emirates 24/7 reported. 

A recent report by Meed puts contracts worth $27 billion being awarded in Dubai alone over a span of 10 years, while the UAE has seen $56.45 billion worth of contracts being awarded in the last seven years. Experts believe Dubai is likely to face a housing shortage by 2020, and will requires new hotels to accommodate growing number of tourists. The emirate is host to Expo 2020, which is expected to bring over 25 million tourists to the country.

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Damac continues on upward trend

Profit at Damac shot up 46% last year, despite the recent slowdown in the market, The National reported.

Damac, which is known for signing licensing agreements with the likes of Fendi, Tiger Woods, Donald Trump and Paramount, said net profit grew to US$937 million last year from $641.5m the previous year.

Damac attributed the growth to the completion of 3,553 homes in eight projects during the period.

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