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Do you think Dubai Holding’s new property vertical will boost Dubai’s real estate industry?
The results are in.
September 13, 2009 2:01 by Dana El Baltaji
Dubai Holding announced in August it had merged its property portfolios – Tatweer, Dubai Properties and Sama Dubai – in a bid to cope a post-crisis property market.
“The realities of the global economic climate have made it necessary for us to look at our portfolio in a different way,” Ahmad Bin Byat, CEO of Dubai Holding, said on August 16, when the conglomerate announced its restructuring plans. “In order to remain competitive in the marketplace, and be sure that we are poised for success once the markets open up, we’ve undertaken a number of changes that will reinforce and strengthen our business.”
Dubai Holding maintained that despite the merger, the developers’ “existing project plans will remain in place,” the conglomerate said in a statement.
However, in spite of Dubai Holding’s claims that the new vertical will strengthen the real estate industry, the majority of respondents to Kipp’s poll – 49 percent -feel the merger will do no such thing. As far they’re concerned, the new property vertical is run by the same people that drove the real estate market into the ground.
A minority of respondents, however, isn’t as cynical; 13 percent said the new vertical may help the property industry, but they need to know how it operates first. Meanwhile, 17 percent of voters said that the merger will “consolidate Dubai Holding’s strength in the market.”
Dubai’s property market has suffered significant price drops since the crisis hit the region in September 2008. Prices fell so dramatically – 47.3 percent – that London-based property consultant Frank Knight named Dubai the world’s worst performing market between Q2 2008 and Q2 2009.
Mergers among Dubai’s property developers are inevitable, especially since that so many of the developers are run by the same entity. However, given that over 50 percent of mergers fail, Dubai Holding’s new property merger will be scrutinized heavily by the public.
Finally, a worrying percentage of respondents – 21 percent – don’t know what a vertical is. Look it up.