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Making sense of Dubai’s property market
Kipp spoke to Jesse Downs, head of research at Landmark Advisory, about Landmark’s reports, Dubai’s real estate market and why the visa law needs tweaking.
May 4, 2009 2:21 by Dana El Baltaji
Kipp: Why is there a difference between the two?
Downs: They’re two different markets largely because Abu Dhabi was primarily investor driven before, but now you’re seeing an entrance of end-users because some of these projects are now close to completion.
Kipp: A number of analysts have predicted that prices will continue to fall in 2009, before stabilizing in 2010 and recovering in 2011. Do you think investors will wait until the end of 2009 to buy properties in Dubai?
Downs: I think investors are waiting for a price floor, and popular sentiment is that that will happen at the end of 2009 or in 2010. While there might be slight variations within a matter of months, I would tend to agree with that largely because we will see another dip in the summer driven by people who are motivated to sell because they’re leaving at the end of the school year.
Kipp: Other analysts say that once Amlak and Tamweel begin lending again, the market will change.
Downs: Yes, I definitely think you have that demand there but financing has to be there. Most people can’t buy a property completely with cash, particularly end-users. So there is that demand waiting for financing to come back into the market. And once that returns it will definitely boost demand.
Kipp: Do you think people are worried about buying properties in Dubai, because prices are expected to drop in 2009?
Downs: That’s the thing about price floors; you can only see them in retrospect. So a lot of people will be waiting for that. There are people who will take a risk and get it right, and they’ll be rewarded; others will buy after the floor has emerged, and they won’t have quite as much advantage. It’s largely dependent on timing.
Kipp: Regarding the new visa resolutions, do you think the law is comprehensive enough to attract investors to Dubai? In other words, will it encourage investors who were previously suspicious of Dubai’s property market to invest in the emirate?
Downs: It is encouraging. But a lot of details still need to be worked out. For example, how do you value the property? Is it on purchase price? Is it on current market value? Because you’ll find that some people purchased off-plan in the past and their properties have appreciated and other people’s properties have depreciated. Because they bought at the height of the real estate market.
The other issue is the renewal process. Is it going to be cumbersome? Will that put off people?
Now the minimum requirement of AED1 million will reinforce the current trend of flight quality.
Basically, we need greater clarity on the details of this law.
Jesse Downs is head of research at Landmark Advisory, part of Dubai-based brokerage and consultancy firm Landmark Properties. For more information about Landmark Advisory, log on to www.landmark-advisory.com.
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