Developers infuse confidence into Dubai market

Dubai: Now that the market has settled down following Cityscape last week, analysts say most developers did a "fair job" of infusing confidence into the market, despite visitor numbers being down 50 per cent.

Many people had viewed Cityscape as a litmus test to gauge the true state of the market. And most were satisfied that while the market still faces a number of challenges going forward, investor interest is still there and confidence is making a comeback.

The fact that all big developers including Emaar, Dubai Properties, Nakheel, Aldar and Damac showed up — except for the notable absence of Sorouh — highlighted this.

Continued pain

But the failure of the off-plan sales model means continued pain is likely to persist as the market remains weak. Liquidity and supply and demand remain the priorities.

"Liquidity constraints- funding for developments and dealing with working capital requirements at the operating level for developers.

Liquidity being available for end-users is also important, which in tandem with stronger confidence and positive sentiment will help.

However, the backdrop of new supply coming on stream and being absorbed by the market means the market will continue to be stable at best, before a real recovery can set in," Sana Kapadia, research analyst at EFG Hermes told Gulf News.

Though there continued to be genuine interest in certain projects, such as Meraas' Jumeirah Gardens, most developers are still battling with inventory build-up and funding difficulties.

Prices have dropped up to 50 per cent in some areas of Dubai but are now generally thought to be in the bottoming-out phase if not hit bottom already in specific locations.

"For almost a year now, the Dubai market has waited for the prices to finally hit bottom… that time came in late August just prior to Ramadan. Since Ramadan, the prices have slowly started to rise in certain areas and we believe this trend will continue for the next year or so. The rate of increase will not be equivalent to what we saw in the last few years but will be a more moderate rise," said Tom Bunker, investment sales consultant at Better Homes.

The relocation of newcomers to Dubai who will be joining companies or setting up there own operations will also cause values to rise, said Bunker.

There are now a wide range of premium properties for new and existing people in Dubai and as these properties get snapped up, their values will rise too.

Ludo Verheyen, chief executive of MTE Studios, a consultancy firm specialising in themed architecture, said enquiries during Cityscape increased 45 per cent on last year's figure.

This is partly due to increased competition as developers felt they had to offer something unique.

"We anticipate at least three good business leads this year that could potentially turn into confirmed projects," Verheyen said.