The volume of real estate sales in Dubai, UAE exceeded Dh129 billion ($35.12 billion) during the first six months (H1) of this year, compared to Dh57.6 billion ($15.68 billion) during H1 2014, said an industry expert.
About 20,000 investors belonging to 142 different nationalities pumped nearly Dh53 billion from January until June, explained Ismail Al Hammadi, founder and CEO of Al Ruwad Real Estate Consultants, a pioneer in real estate consultancies across the UAE.
Negative speculation
In general, there were concerns that prevailed in the community interested in real estate affairs in the UAE and some particularly in Dubai as a result of the repercussions of the aggressive global and economic changes, such as globally accelerating oil prices and its impact on the state as one of the top oil producers in the world.
To add to that was the rise in the value of the US dollar compared to other currencies and the decline of other world currencies such as Russian rouble.
These fears were further reinforced by a segment of investors along with a wave of owners selling their properties to take advantage of the exchange rate and achieve higher returns.
Motivating factors
"What was happening on ground in Dubai is frankly quite different and very strange - since we saw that in spite of the rate of residential property prices decrease at first, it then rose to three per cent in the second quarter of the year. This is more than the annual growth rate of 2014 which was 2.5 per cent,” Al Hammadi said.
He pointed out the fact that the market has witnessed a wave of sales resulting in the developers realising that the limited-income families are an important part in reviving the market and the reason to add to the continuing growth equation.
“Several huge projects, that have seen the light of day, enabled for more flexible options in terms of prices yet preserving the reputation of Dubai in terms of elegance and status. Some of such projects have fully been sold after less than a day of their launch, with easy settlement options of one per cent interest over seven years!” Al Hammadi continued.
Al Hammadi said that these projects have been credited due to the recorded high amount of sales in Dubai over the past few months, where he pointed out that the month of June alone had witnessed sales worth Dh1.2 billion.
Dubai ‘home to one of the largest companies’
Al Hammadi noted that the presence of world's largest companies in Dubai is another factor that supports the real estate sector across the medium and long-term strategic plans, citing Emaar Properties as an example.
The company is one of the world's largest real estate development companies in terms of value with its assets touching the mark of Dh159 billion and extending 216 million sq m. He pointed out to the quarterly results announced by the company just days ago, showed that it accomplished a net profit amounting to Dh2.2 billion during the past six months, an increase of 12 per cent from last year.
Al Hammadi pointed out that Emaar Properties is not an exception to great figures: Damac Properties shows that its mid-term profit jumped to Dh2.7 billion, recording its shares as the highest level price since listing, thanks to dividends and profits.
Al Hammadi linked the positive breakthroughs of Dubai Financial Market to the entire real estate sector shares, and that the general index of the market received significant support from these shares.
Expo show and key projects
Al Hammadi expected that infrastructure projects for the Expo 2020 are going to create sustainable stability for real estate prices in Dubai, particularly in light of the launch of Meydan One, a crucial and enormous project, in addition to a similar announcement of the tallest commercial tower in the world, Burj 2020 in the Jumeirah Lakes Towers area.
In this context, Al Hammadi cited that with official figures that have been announced earlier, the Expo requires investments in infrastructure worth $8.8 billion (Dh32.4 billion), and the returns will amount to $23 billion, according to the Bank of America Merrill Lynch.
Al Hammadi stressed that the government’s step in liberalisation of oil prices carries a positive impact on real estate sector, especially now that the diesel prices have been reduced, which promises a steady growth rate in the near and long term future. In parallel, Al Hammadi stressed that the declaration of Mohammed Bin Rashid Al Maktoum Foundation with its loans portfolio amounting to Dh6 billion, would further deepen the strength of the property sector in Dubai over the near and long future.
Sustainable growth
He concluded that he has a positive outlook and will focus on maintaining and exploring the potential of the Dubai real estate with an emphasis on local, regional and bringing it up to par on a global level too.
“It’s no secret that the Dubai market in particular and the UAE in general has great potential in terms of its value in real estate assets. For example, it’s about 122 per cent higher than its Singaporean counterpart,” he said.
Al Hammadi pointed out that the real estate sector is a key contributor to the gross domestic product of the Emirate, which is why Dubai's Ruler Sheikh Mohammed bin Rashid adopted the largest budget in its history for the current year 2015. This is a huge gesture and shows the potential and strength of the real estate sector and to what extent it contributes to the budget, he noted.