Dubai Holding director sees end in sight to real estate market correction

Property prices likely to see uptick from 2019 onwards, says Khalid Al Malik

Khalid Al Malik, chief real estate officer at Dubai Holding and acting CEO of Dubai Properties, at Cityscape Global in Dubai on Tuesday. Chris Whiteoak / The National

Dubai’s real estate market is close to the bottom of a two-year downturn and the market should pick up in 2019 as business activity gains momentum ahead of Expo 2020, said a senior official at Dubai Holding, the emirate’s investment vehicle.

“Yes, there has been a correction in prices, a correction in the designs of products – the type and quantity – but this is purely a correction in terms of supply and demand,” said Khalid Al Malik, chief real estate officer at Dubai Holding and acting group chief executive of Dubai Properties, a unit of Dubai Holding.

"Personally, I'm very optimistic and believe the market will pick up in 2019," he told The National in an interview. Dubai Holding is building the 2.2 square kilometre Marsa Al Arab two-island complex near the Burj Al Arab, and the Dubai Creek Harbour mega-project in partnership with Dubai-listed Emaar Properties.

The emirate’s real estate market is no longer driven by the rapid buying and selling – or ‘flipping’ – of luxury property that characterised the pre-2009 boom years before the global economic downturn. Instead, the market has matured and is catering to a broader range of tastes and price points, Mr Al Malik added.

“Honestly, the market has been very different because before it was very much dependent on speculation, which put it totally out of [balance]. Today, we are dealing with real customers, people who have the money to buy; the end users, the ones who buy for the purpose of actually living in these apartments and villas. The market is very stable now,” he said.

In addition, the number of visitors to Dubai is forecast to reach between 21 and 22 million by 2022. The Expo 2020 Dubai mega-event is a further draw for tourists and prospective investors alike, as it will bring a “huge demand on everything – from transportation, flights, roads, rental properties and hotels. All the indications are positive so we need to be prepared,” Mr Al Malik said.

His optimism comes after a sluggish few years for the UAE property industry. Residential sales and rental prices have dropped in the wake of a three-year oil price slump, with year-on-year declines exceeding 10 per cent in some neighbourhoods as housing allowances were squeezed and buyers and renters sought cheaper deals.

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However, increased government spending and an uptick in oil prices to $83 per barrel (Dh305) this year have buoyed investor sentiment and prompted expectations that prices could start to rise again from 2019. Consultancy JLL said in a report this year that while residential prices in Dubai have fallen by around 20 per cent since the last market peak in October 2014, the market is now approaching the bottom of its cycle, with only limited declines expected over the next year.

Meanwhile, recent changes to UAE visa laws to allow 10-year residency for certain expats is expected to encourage long-term residents to buy property, rather than rent, JLL said.

"I think [the decline in prices] has been overly negatively described," Mr Al Malik said. He was speaking to The National at the Cityscape Global property exhibition in Dubai this week, where developers showcased a slew of upcoming projects and launched thousands of units for sale.

Dubai Holding is marketing Madinat Jumeirah Living, a new luxury residential development with gated apartment clusters, community retail, parks and swimming pools to be constructed next to the company’s Marsa Al Arab tourism destination near the Burj Al Arab. Madinat Jumeirah Living is scheduled to break ground early next year and be completed within two years.

The company continues to sell phased units at its other residential schemes, where further development continues as buyers and tenants move in, which include One JBR, Villanova, Mudon and others. The majority of buyers are from the UAE, India and the UK, Mr Al Malik said, in line with investment trends across the emirate reported by Dubai Land Department.

Dubai Holding will continue to offer a mix of affordable and luxury products, “as flexibility is key to being competitive as a real estate company,” he said.

Mr Al Malik became acting chief executive of Dubai Properties last month following the resignation of Raed Al Nuaimi who was appointed to the role as part of a management reshuffle in February. Dubai Holding is looking for a permanent replacement, Mr Al Malik said.