Dubai: Dubai’s new super-committee to oversee the real estate sector will have three clear objectives — reduce the risk of oversupply, give private developers more space to build their credentials, and be realistic about the projects the city will need to back in the next 10 years.
“When everyone shouts about oversupply, what they fail to realise is that such a situation will not happen in every category of the real estate market,” said Firas Al Msaddi, CEO of fam Properties.
When everyone shouts about oversupply, what they fail to realise is that such a situation will not happen in every category of the real estate market.
“Singapore controls the supply of new land for development in an extremely sophisticated way — it’s something other cities could do.
“Because when market conditions turn challenging, land prices could get affected. Buyers will be tempted to go for ready properties that could be selling close to the actual cost of development.
Singapore controls the supply of new land for development in an extremely sophisticated way — it’s something other cities could do.
"Then there’s the risk that anyone left holding unbuilt land will find no takers, and even have to sell cheap.
“If developers realise what sort of property categories they should focus on — instead of just doing residential — it would be to the good of everyone.”
Shaikh Mohammad’s instructions
On Monday, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, UAE Vice-President and Prime Minister and Ruler of Dubai, issued an update on a tweet he had sent earlier.
It followed the setting up of a “Higher Real Estate Planning Committee”, which will be chaired by Shaikh Maktoum Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai.
Other members of the committee will have extensive trackrecord in the real estate space, though their identities were not revealed.
They will investigate what would be the “right balance” of supply and demand Dubai should have going forward.
On his official Twitter page, Shaikh Mohammad, later said: “We instructed Shaikh Maktoum to ensure that semi-government real estate companies do not compete with private investors and to develop a comprehensive strategic plan and vision for all major real estate projects in the emirate for the next ten years.”
Question of balance
This year, Dubai would see about 20,000 plus new homes being delivered, to add to the 15,000 units or handed over last year. Prior to that, handovers were limited to less than 10,000 or so new homes.
This is why concerns were being voiced in many quarters that Dubai could see an oversupply of homes, more so if many of these do not have buyers at the time of completion.
“Lingering concerns regarding the state of oversupply will now dissipate,” said Nasser Malalla Ghanem, founding Partner at NM Law.
This initiative will not only bolster confidence among investors and developers, but buttress the reputation of a city that continues to be at the forefront for foreign investment.
“This initiative will not only bolster confidence among investors and developers, but buttress the reputation of a city that continues to be at the forefront for foreign investment.”
So, if the new Committee, now sets markers for private and government owned developers, some of the balance could be restored.
And not just for now or the next year, all the way to the next 10 years: “Dubai has seen rapid transformation and growth over the last few years in both its built environment and economy, changing the fundamentals of the city in the process,” said Taimur Khan, Associate Partner at Knight Frank, the consultancy.
“Therefore, the development of a strategic plan for Dubai’s upcoming real estate projects over the next decade will go a long way in helping achieve Dubai’s long-term objectives.”