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Dubai’s growing real estate boom

: Wednesday, December 11 - 2002 @ 15:54

To sell-out one Palm Island development might be considered lucky. But to sell-out a second one, as AMEInfo heard this week, shows that something big is happening in the Dubai real estate sector.

All right, these are special projects – man-made islands in the shape of a palm tree – that might have a particular niche. But no, enquire at Emaar Properties as to how many villas are left in the Emirates Hills area. Sales people politely ask you to wait for the nearby Arabian Ranches project, coming soon. All the other villas are sold, off-plan, for the next two years.

It is tempting to try to see some element of smoke and mirrors in this success. But there does not appear to be any. For example, only a handful of the 700 Meadows villa sales earlier in the summer have since fallen through and have been quickly snapped up. Late comers are, well, jut too late for this real estate party.

Now the investment professionals are trying to figure out just what the aftermarket might be like. It is a tough call. The villas will not be available for 1-2 years, and a market in expatriate and national owned property has not existed before.

Some villa deposit options have apparently changed hands for 20-40% above their selling price, but this is fairly anecdotal evidence at this stage. In reality no one really knows what the price movement on Dubai’s new real estate sector will be, except that demand exceeds supply by an extraordinary amount, and that implies a big upward push on prices.

Saudi property prices have doubled and in some cases trebled in the past year, partly as a result of the return of funds from the United States post September 11th. This could be indicative of the way things will go in Dubai.

However, there is no doubt that the Dubai Government – which is the driving force and a major shareholder in all but one of the developments to date – will accelerate its building programme and will one day match supply with demand.

But how long will that take? Industry experts scratch their heads. Apartment towers take longer to build than villas, so villas may catch up sooner with demand. But then again, land constraints will make villa locations scarcer than the towers.

For the time being, even the most optimistic real estate pundit is bowled over by the success of Emaar Properties whose share price explosion can only be waiting for a resolution of the Iraqi situation.

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Wednesday, December 11- 2002 @ 15:54 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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