Dubai heats up again
Foreign buyers are showing renewed interest in growing financial hub, writes Peta Tomlinson
At the time, Dubai was reeling from one of the biggest property slumps since the global financial crisis. Prices plummeted by 64 per cent below the years leading to the mid-2008 peak. Developers wrote down billions of US dollars after the values of their projects halved, leaving apartment towers unoccupied or even abandoned.
In 2013, Dubai is once again "one of the hottest real estate markets on earth", ranking second in a Forbes rating behind Hong Kong. The report cites Knight Frank data showing that Dubai housing prices rose by 19 per cent last year - but beyond that, location was a key criteria. Dubai has a strategic role in the expansion of global and inter-regional trade in the Middle East and North Africa, and is positioning itself as the financial hub of the region. Forbes also notes that "with the first three months of 2013 already witnessing a massive rise in home-buying interest among end-user expatriates, as well as investors, this year could see Dubai rise to the top of the global ladder".
Developers, such as Emaar Properties, having seen a potential opportunity, have begun marketing their schemes in the region. Indians are traditionally the largest foreign buying bloc - a Government of Dubai Land Department report shows that Indians comprised 25 per cent of the 36 billion dirhams (HK$76 billion) investment by foreign investors in the city's property sector in 2012. Noting this, the company held roadshows in Mumbai and New Delhi in February, showcasing its residential and commercial portfolio.
The company is advertising in Singapore but remains circumspect about plans for a Hong Kong or mainland roadshow. Emaar says: "With our projects' launches in Dubai attracting customers from around the world, hosting special roadshows in international markets provides the opportunity to engage with potential clients. These roadshows also highlight Dubai's growing appeal as a preferred destination for investment, and as the fastest-growing shopping, tourism and business hub."
Across the city, construction is on again. A series of new project announcements include an Emaar/Meraas Holding joint venture to build the 11 million-square-metre Dubai Hills Estate, a mixed-use project featuring an 18-hole golf course, and Dubai Holding LLC's plans to develop the 6.5 million-square-metre Dubai Creek Harbour project. Emaar has also started work on a massive expansion of the Dubai Mall, the world's biggest by area. Companies such as Tecom Investments LLC, a unit of Dubai Holding, and Nakheel PJSC, builder of the palm tree-shaped artificial islands off Dubai's coast, are also reportedly starting new developments. Dubai's upcoming new residential supply is expected to total 40,000 units during 2013/15.
Yet the pace of growth has some concerned, including Craig Plumb, head of Middle East research for Jones Lang LaSalle, who says: "There are real concerns that the Dubai residential market is again overheating and that stakeholders in the market have not learned the lessons of the last market boom [from 2006 to 2008] that quickly led to tears."