Rapid growth, major reforms
The development in the UAE realty sector is picking up pace as leading developers announce new projects and further investment opportunities. The IMF has forecasted the growth this year to reach 3.9% as compared to 4% last year. Last June, stocks received a further boost when the market index providers MSCI upgraded the country to emerging-market from frontier market status.
Nakheel is one of the many developers that has announced plans to crank up on their development pipeline. The firm, which just announced that it is set to be debt-free soon without any need of help from the government, said it will focus on development activity where it already has raised significant infrastructure. A spokesperson for the company said they will announce more projects this month. Meanwhile, Emaar properties said it will add over 200 villas to its Arabian Ranches development, launching the 'Lila' development. In Downtown Dubai, a Dubai-based private developer will be launching a new residential tower and sell units at AED1,800 per square foot.
With the rapid development comes fresh warnings for a property bubble. Sachin Mohindra, portfolio manager of the GCC Fund at Invest AD, said winning the bid for Expo 2020 "adds extra zest" and there is concern that another bubble may be forming. Meanwhile, Roubini Global Economics wrote a report, saying there is a risk for a "boom-and-bust" cycle in the coming years.
Taking these concerns in mind, the UAE is stepping up efforts on reigning in speculation. The Land Department in Dubai has announced plans to complete a review of off-plan transactions in the first quarter of the year and may also introduce new regulations later in the year. Developers are also joining in on the effort against speculative buying and selling. According to Gulf News, developers are no longer giving the green signal to those off-plan purchases where the investor is simply looking to make a quick profit.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The Dubai market is at a crucial stage at this point, with rapid development on one end and regulative measures being implemented on the other. Striking a balance is essential and will determine where the market is heading over the next few years. The Expo win has certainly improved confidence in the market but it has also led to quick development that has triggered fears that another property bubble is brewing. Understanding these concerns, the government has stepped up its efforts to reign in speculation. We will continue to study these trends and keep our readers updated on the new regulatory measures being implemented while continuing to shed light on new investment opportunities.