Oct 7 ,2014 , Dubai
The Dubai property market is still “grossly underpriced” and will grow in the long term, according to a developer.
“There is a great deal of potential in the Dubai market, especially when you consider its position in comparison to other major international cities,” Raza Jafar, Chief Executive Officer, Enshaa said at a recent debate held at Dubai's Capital Club.
“At this point in time Dubai’s property sector is still grossly underpriced in comparison to its international counterparts, which means it has the capacity to still grow significantly in the long term.”
He emphasises that Dubai's importance as a global financial hub was already well established, and that the strength of its infrastructure and the scale of projects being delivered meant that it compares favourably with other hubs like New York, Shanghai, London and Singapore.
In March, Knight Frank’s Wealth Report 2014 said that Dubai’s prime luxury property market remained affordable in comparison to key global cities despite prices rising by 17 per cent in 2013.
One can buy 146 square metres of prime property for USD1 million (Dh3.67 million) in Dubai compared to only 15 square metres in Monaco, 20.6 square metres in Hong Kong, 32.6 square metres in Singapore and 25.2 square metres in London, the UK-based consultancy said.
(Read: Prices rise 17%, but Dubai luxury property still cheap)
Dubai also provides excellent earning opportunities to its residents thanks to its taxation benefits, with the accompanying generation disposable income and hence people have opportunity to build up real estate assets over here, he stated.
Enshaa is developing D1 tower and the Palazzo Versace Dubai.
Speaking at the panel debate, JLL's head of research Craig Plumb said that residential property price increases were showing signs of stabilising.
“Average prices in this sector have increased by 64 per cent over the last two years. The good news now is that, while the market is still rising, it is very close to the top. Although prices are still going up at this point in time, the growth rate itself has slowed down," he added.
Earlier this year, JLL ruled out a correction in property market, dismissing fears of property bubble, stating the market was “smarter”, investors were cautious, regulations were better and developers less reliant on pre-sales model to fund projects.
Citi, one of the largest retail banks in the world, also said that the current levels of construction activity, were not out of line with market fundamentals and were not creating distortions to overall economic growth that occurred in the lead up to 2008, when property market crashed.
Andrew Chambers, Chief Executive Officer, GGICO Properties, another panelist, believed developers were approaching the market with a lot more "commonsense”.
"Generally, we now find that the majority of newer and relatively smaller developers have shifted their focus from selling wholesale – looking for people who will buy property in bulk and flip it – to developing projects that suit the market. It certainly seems to be a lot more stable," he asserted.
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