Dubai, 15th September 2008: UAE Property - the ups and downs in the midst of flux Optimism and gloom alternate as UAE real estate experiences growing pains - outlook remains positive in a market moving quickly towards maturity

UAE Property - the ups and downs in the midst of flux
Optimism and gloom alternate as UAE real estate experiences growing pains – outlook remains positive in a market moving quickly towards maturity
Byline: Tessa Morris, DSL Exhibitions www.dsl.ae

Dubai, 15th September 2008: 2008’s 3rd quarter that ended in September has been full of thrills and spills for the UAE property market, to say the least – however, the positives definitely winning over the negatives in the end. With the world economy in chaos, the UAE has been able to retain its space as a sunny spot, even though several bits of bad news have hit the stands recently.

Bad press
Business page headlines have been crowded with several key industry professionals coming under scrutiny, as well as several property deals going sour. While the latter is unavoidable in business, key functionaries across the industry have been accused of some serious malpractices – without going into the details, let’s just say that for any sector, this is not healthy. A large fallout of these was seen at the stock market where Emaar – the lifeblood of the Dubai Financial Market – saw some serious battering, even though it was unscathed in terms of reputation. Clearly, investors are not happy about the financial irregularities that are currently under investigation by the authorities.
On the consumer side, prices in Dubai at least are still stuck at a level out of reach of most end-user buyers it would seem; however, strong sales in other emirates continue. While there were some reports that prices in Dubai are likely to fall by 10% by 2010, this is mostly wishful thinking. For those who wish to enter the market and capitalizes, there is little to be gained by waiting for this mythical fall in prices that is predicted by those yet to enter the fray.
Rents have been as hard hit as sales with the new RERA rental regulations and caps seeing landlords putting up rents unrealistically once a property is out of contract, knowing they will be unable to repeat the process for 3 years should a tenant wish to stay. This however has had a positive knock on the sales market as many now question the rationale of paying an enormous rent that could well be offset by a mortgage leading to ownership of a piece of real estate.
At the same time, rise in prices of construction material may see some thinning of margins for contractors, who are mostly tied in with long-term contracts with developers.
On the environmental front, the quarter saw publication of statistics on construction-related waste, where Dubai alone accounted for 6.3 million tons of waste. With construction activity spreading across several emirates, the government urgently needs to step in to regulate this issue, which might result in serious consequences for the country, in terms of environmental degradation.
The Quality of life that residents enjoy also comes into question with traffic congestion reaching unbearable levels and severely impacting living conditions people face in this booming country. While everyone understand that UAE is going through dramatic changes and that these issues are an automatic end-product of growth, residents are questioning whether enough is being done to ease the situation - not only in the long term but in the short term as well?