In the current climate, smaller private developers may find it difficult to compete with the larger government-backed developers, who often have easier access to land and financing options. To create a fair playing field and for the market to sustain both types of developers, there needs to be a clear separation of roles, says Nick Witty, managing director of Chestertons Mena. “Perhaps the most sensible way to address this issue would be to let the larger developers focus on creating the master scheme, along with all the associated infrastructure, selling key zones to smaller developers who will then be able to focus on selling individual and multiple units,” said Witty.
In September it was announced that Dubai was establishing a higher committee for real estate planning, which will, among other things, help ensure that government-backed developers don’t compete with smaller, private ones. “No doubt this committee will develop a clear strategy to approach [the competition between government-backed and private developers] over the coming months,” said Witty.
This is particularly important given residential property prices remain under pressure, with Dubai’s housing market expecting around 36,000 new units this year, the highest number of completions in the last decade, according to property consultancy JLL.
Government-owned developers such as Meydan and Meraas, or those in which it has a considerable stake such as Emaar, have led the way in freehold sales this year. In comparison, private names have held back on new launches and focused more on completing existing projects.
“I think it should be balanced. There are more residential projects than commercial. The government should tighten up the rules regarding new project launches,” Gaber Nehma Kenger, CEO of GN Homes Real Estate Development, told Property Weekly. “Developers should show commitment to complete a project before selling and not depend on sales to complete a project. That way, it will give the market more value and will give buyers more confidence to invest in the market.”
At the end of the day, the market will always react to the quality of homes being provided and the location they are offered within, Nick Grassick, managing director of PH Real Estate, noted. “The commercial success or failure of individual projects will shape how a developer will consider future projects. We may yet see government-backed developments manage the master-planned communities and the social infrastructure required to service those communities, with private developers delivering a more boutique service.”