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The Dubai property market is increasingly leaning towards affordable accommodations, an expert at Ggico Properties recently highlighted.
Speaking in an exclusive interview with Khaleej Times, Andrew Chambers, chief executive officer of Ggico Properties, said: “The market today is leaning more towards affordable housing because that is where the greatest demand is. Dubai is getting an estimated 100,000 people a year, and it is probably looking at a growth rate of about five per cent. Now that is fantastic anywhere in the world for a city the size of Dubai. If you are getting 100,000 people a year, you probably need at least 50,000 new dwellings a year; and these are the ones that are now geared towards the affordable housing segment.” Chambers said that he believed that the property market in the UAE has become a lot more “organic and demand driven”.
Asked if there was a bubble in the property market, he answered with a resounding no.
“What we are witnessing now is a boom that is not going to bust,” he said. “The growth in the property market has slowed down and it is definitely more controlled. There is a real supply-demand balance, which is a sign of a healthy mature market. In addition, there aren’t any external influences pushing money into the UAE market to create a boom and bust cycle like before.”
Chambers also explained that Dubai is now attracting an increasing number of “real investors”. According to him, these can be families looking to buy a villa or apartment to settle their families in; or individuals looking to build and expand their portfolio of properties to rent out in the long term. Chambers noted that these investors are looking at properties in Dubai Silicon Oasis, Dubai Motor City and Dubai Sports City, where properties cost between Dh850 to Dh1,050 per sqft.
“We are witnessing a genuine maturing of the markets across the emirates,” Chambers revealed. Highlighting the sector development in Dubai, he noted that the world class infrastructure, efficient bus network and Dubai Metro are all signs of a maturing market. “Another sign that indicates that the market has matured is that the government has introduced and enforced rules and regulations on the mortgage cap. Yet another factor putting quality in developments is the restrictions on developments and developers, and the rent cap which has stabilised the market here. In addition, institutional investors and funds have started to enter the market here, not in a big way yet, but in small steps,” he explained.
Chambers also noted that developers have become more savvy financially when it comes to project management. He revealed that developers are now sharing the risk by collaborating through joint ventures. “Even contractors are being asked to be partners in a venture, and this gives them more of an incentive to finish a project on schedule,” he said.
Chambers further noted that the time was right for businesses to invest in the UAE. “Due to its close proximity to the markets in Africa, the Subcontinent, and the greater Middle East, Dubai is seen as one of the top 10 investment destinations in the world. The city is helped a lot by the free zones, the world class ports, the great infrastructure, strong telecoms, and stable business environment.”
“The life cycle of a commercial lease is a lot longer than the life cycle of a residential unit,” Chambers added.
“Ten years ago, commercial leases were offered for a year or for a maximum of three years, but now landlords are offering three-, five- and even seven-year contracts, because if a company is looking to take over an area of around 17,000 sqft then you can be certain that they are going to spend a lot on fit-outs and are clearly looking at staying for longer than a year. The quality of the office spaces has also improved, with developers having reacted to the demands for different types of commercial space.”
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