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Stating the obvious
It seems we are at last accepting that real estate projects no one wants are probably not worth building. We guess this is a good thing.
March 17, 2011 1:06 by Samuel Potter
According to Emirates 24-7, Dubai’s Real Estate Regulatory Agency (Rera) Chief Marwan bin Ghalita agreed with Le Bail, saying “projects that are not good for investors will not go on.” Rera has apparently already cancelled 202 projects, while work is currently continuing on 220.
These cancellations will certainly help to ensure a tough real estate market doesn’t get exponentially worse, but we still have to face declines this year, apparently. Jones Lang Lasalle reported earlier this week that stabilising rents, smaller community malls and a fledgling recover in the hotel sector will be key themes in the UAE’s real estate market in 2011. But the firm also said that declining rents will continue to dominate the real estate sector in both Dubai and Abu Dhabi, with prices in Dubai reaching the bottom this year.
“In Dubai, rents continue to fall, but the rate of decline is shrinking and there are strong indications that many segments are approaching the bottom. In contrast, rents in Abu Dhabi are expected to continue to decline in the year ahead,” the report said.
One idea that may bolster the industry is a real estate investment fund, being proposed by everyone’s favourite International Financial Centre, the Dubai International Financial Centre. The DIFC hopes it will attract investors to a range of property across the country.
“There is no well organised market structure for investing in real estate. It’s not easy,” said Dr Nasser Saidi, DIFC’s chief economist, on the sidelines of an Arab property conference yesterday. “A real estate investment fund is important because it provides a facility to invest on a broad basis.”
Unfortunately legislation and ownership structures will make the idea challenging, says Ian Albert, regional director of Colliers International. But Kipp is sure there must be a few experts on hand who can help out.
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