| Member Options |
|---|
| Property Search | |||||||||
|---|---|---|---|---|---|---|---|---|---|
|
| Real Estate News |
|---|
 |
Azizi Investments confirmed purchase of land at Mina Rashid Arabtech Construction to construct Dubailand Project Radisson SAS Residence, Dubai Marina opens luxury apartments |
Luxury properties in Dubai oversupply feared
- September 19, 2006, 11:21 pm
Serious concerns have emerged over a “mis-match” in supply and demand for top-tier Dubai property.
A potential lack of investors able to finance mortgage payments of approximately Dh18,000 a month for up-coming luxury properties in Dubai could create an over-supply in the higher-tier market, property market insiders say.
On the other hand, quality developers are continuing to overlook the provision of properties aimed at mid- income earners, they say.
“There seems to be a lot of property which is coming on line in the next two years in the high end of the market, where prices average Dh900 per square feet. In the waterfront area alone you will not find anything less than Dh1,000 per square foot,” said Khalid Nazir, head of investment banking at Abu Dhabi Islamic Bank.
Nazir said if demographic predictions are to be believed, these prices will be out of reach for most UAE residents, creating a mis-match between supply and demand in the high-end real estate sector.
“When you work out a 25-year mortgage on an average flat in this sector, the payments would be around Dh18,000 a month. There are many international and regional investors who would be able to pay that sort of money, but will all the supply be taken by them I doubt it,” he said.
However, at the other end of the property spectrum, Nazir said the supply of mid- to low-tier housing will fail to meet demand in two years when the UAE develops its manufacturing and boosts employment.
Speaking to delegates at yesterday’s opening day of the Real Estate Investment World Middle East conference, Khalid Al Mashaan, chairman and managing director of Alagarn International Real Estate Company in Kuwait, said the GCC’s mid-income housing sector is being overlooked by “professional” developers.
“There is a big market out there for property aimed at mid-income families, but not enough attention is being paid to it,” he said.
“At this stage, what we are seeing is local players in the market, and local players are providing the same model over and over again without looking at the needs of the market.”
Liquidity crunch?
A major weakness in the UAE’s property sector is the government’s lack of control over interest rates, according to Abu Dhabi Investment Bank’s Khalid Nazir.
“One of the problems in the UAE is that interest rates are set by the FED in the US as the local currency is directly pegged to the dollar. This means that market liquidity cannot be controlled,” he said.
“This is a big problem because rates in the market are set by the level of liquidity and that is not controlled by the local market condition.”We could get a liquidity crunch when it is least wanted,” he added.
Source - Gulf News
Latest News
Dubai Property Prices to fall by 2011
Tamweel announced that it expects higher growth in 2008
Realty Capital cooperates with Al Naboodah to boost i-Rise
Nakheel partners with US food retailer Balducci’s
| Currency Converter | |||||
|---|---|---|---|---|---|
|