18/03/2015 05:39 AST
The chief of Dubai Investments (DI), one of the largest land bank holders in the UAE, expects the property market to gain momentum in 2016 with “affordable” housing category outshining the “luxury” segment.
“I don’t expect a correction in the market. I expect a slowdown for 2015 because of outside factors and not internal factors.”I think 2016 onwards there will definitely be a pick-up on affordable housing because of the projects being undertaken by the government such as Al Maktoum International Airport, Expo 2020 venue development and theme parks in Jebel Ali area,” company CEO Khalid bin Kalban said.
“Market forces are driving developers to leave luxury behind and focus on ‘affordable’ housing.
“We believe these units should be priced reasonably, while the rent too should be reasonable so as to meet the demand for houses from the low- to mid-income people in coming five years.”
These houses should be built for people earning between Dh10,000 and Dh25,000 per month, he said, adding, the company will soon be launching projects in the ‘affordable’ category. Dubai is expected to create over 277,000 new jobs in the run up to the Expo 2020 and is likely to be witness an undersupply situation rather than an oversupply.
In fact, Moody’s Investors Service, a global ratings agency, has stated the slowdown in the market is “positive in the long run” and the government spending on infrastructure and encouraging more foreign investments in various sectors will support the real estate market over the next five years.
In 2014, the Dubai Financial Market-listed company unveiled a number of real estate projects, including the Dh3-billion Mirdif Hills project, a mixed-use development; Dh400 million Fujairah Business Centre project (developed by its subsidiary Al Taif Investment) and an expansion of Green Community, in Dubai Investment Park (DIP), its flagship mixed-use development.
Over 67 percent of the company’s asset base is in the real estate sector and is currently worth over Dh8 billion, making it one of the biggest real estate players in UAE. It has a land bank across UAE, totalling nearly 30 million square feet gross floor area.
Currently, 1,150 new residential units are under construction in DIP, which includes Royal Estates, a project promoted by Bollywood superstar Shah Rukh Khan.
A few developers have taken the initiative to launch projects in the “affordable” segment, with Chestertons, a UAE-based real estate consultancy, defining ‘affordable’ housing to be in the range of between Dh400 and Dh600 per square foot.
The company, which is marking its 20th anniversary this year, revealed its future strategy with plans to replicate its DIP business model in new countries.
“We will be taking our DIP model to Saudi Arabia and have finalized the land.
“We have already paid 25 per cent to buy land there. There is a possibility of us having two more similar projects there in future,” Kalban said.
“We will be replicating the model in Angola, Africa, as well. We are already in negotiations with the government there to acquire land of approximately 45 to 50 square kilometers.
“We have been given three land options and we will be undertaking studies soon to determine the right plot. Besides, we are in talks with other countries such as Morocco and Indonesia,” he added.
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