Capital Club Cityscape panel: Is the Dubai Real Estate Market Maturing?

The Dubai property market is showing signs of sensible and sustainable growth, with residential property continuing to be the most prominent sector. This was the common consensus reached at a panel discussion organised by the Capital Club, Dubai’s premier private City Club and member of the ENSHAA group of companies, in collaboration with ENSHAA PSC, the premium quality project developer and leading hospitality service provider.

Moderated by respected MENA region business advisor Guy Guillemard the panel featured Raza Jafar, CEO of ENSHAA PSC, Craig Plumb, Head of Research at JLL MENA, and Andrew Chambers, CEO of GGICO Properties.

Discussing the short to medium term situation in Dubai’s property market, the panellists agreed that although there has been a significant rise over the past one to two years, the growth rate has levelled out to a sustainable level as of the second quarter of this year. ENSHAA PSC CEO Raza Jafar remarked, “There is a great deal of potential in the Dubai market, especially when you consider its position in comparison to other major international cities. Dubai’s importance as a global financial hub is well established and when combined with the strength of its infrastructure and the quality of projects being delivered in its property sector, it is clear that it compares very favourably to any other international hub, such as say New York, London, Shanghai, Singapore, or Sydney. At this point in time Dubai’s property sector is still grossly under priced in comparison to its international counterparts, which means it has the capacity to still grow significantly in the long term. Dubai also provides excellent earning opportunities to its residents thanks to its taxation benefits, with the accompanying generation disposable income and hence people have opportunity to build up real estate assets over here.” He went on to underline that Dubai prime real estate is currently priced at about one tenth the price of that in London, about one seventh of New York, and about a quarter of that of property in Singapore, clearly indicating the opportunities this provides for both locally based end-users and international investors.

Expressing his agreement with these sentiments and expounding on the recently released JLL Dubai Property Market Report, Craig Plumb, stated, “The market is on the rise in Dubai and the residential sector has certainly been the stellar performer. Average prices in this sector have increased by 64 per cent over the last two years. The good news now is that, while the market is still rising, it is very close to the top. Although prices are still going up at this point in time the growth rate itself has slowed down and become more sustainable, which means that the market has seemed to gain some stability.”

Looking into the issue of supply and demand in the Dubai property market, the panel also seemed to be optimistic, at least in the short to medium term. Craig Plumb, noted that although there have been a lot of new launches, the majority of these projects are still in the launch phase and not scheduled to hit the market any time soon. This was further underscored by the observation that the data available for the next few years shows around 15 and 20 thousand units being added to the market each year. Taking into consideration that the total supply of residential units in Dubai is just under 400 thousand, this means that the increase in supply is only around five per cent, which is a sustainable figure in terms of Dubai’s continued population growth. The question that needs to be asked at this point however is, if a few years down the line a lot of these very ambitious projects that are being ‘launched’ now do hit the market at the same time, what type of supply issues will that create? However, the panel agreed that this would only be an issue further down the line as, for the next few years, demand in the residential sector is still set to outstrip supply, which is why prices in this sector will most probably not fall by any great degree.

The discussion also looked at the shift that has occurred in the way that developers are approaching the market. Andrew Chambers, CEO of GGICO Properties, commented, “This past year we have seen a lot more common sense to the way developers are approaching the real estate market. Generally we now find that the majority of newer and relatively smaller developers have shifted their focus from selling wholesale – looking for people who will buy property in bulk and flip it – to developing projects that suit the market as they come onto the market and not necessarily selling ‘off plan’ unless these sales are to cover mortgages of actual end-users. It certainly seems to be a lot more stable a market, the smaller non-governmentally funder developers are being sensible about how they approach new projects, which bodes well for its growth in the long term.”

About Capital Club Dubai (www.capitalclubdubai.com)
Capital Club is Dubai’s premier private City Club situated in the heart of the financial district – DIFC. A Members-only Club in a contemporary setting for Members to network professionally and socially; dine and party; host private meetings; and attend a wealth of social and business events. The Club is connected to over 250 premier private clubs around the world as part of its reciprocal club network. Capital Club Dubai is majority owned by Signature Clubs International, a member of the ENSHAA group of companies. As the developer and operator of the Capital Club brand, SCI has over 30 years’ experience in developing, launching and operating high-end private clubs in the Middle East, Europe and Asia. Its portfolio includes existing Clubs in Dubai, Bahrain and Nairobi, with upcoming initiatives planned in MENASA, Europe and the US, as part of a major five-year global roll out program.

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