Dubai property market still going strong, says Damac MD

Dubai’s real estate sector is currently undergoing a period of stabilization, but property market fundamentals are still strong, said Damac Properties managing director Ziad El-Chaar.

After a period of close to 50 percent growth for the past three years, the property market needs to self-correct, he told Argaam.

“You need stability. So 2015-16 is stabilization time,” he said, explaining that property prices may continue to grow at a single digit rate, or not at all.

Analysts have noted a current lull in Dubai’s property market, with research firm ValuStrat reporting a “clear trend” of a plateau in real estate prices for May.

ValuStrat’s overall price index registered 98 points last month, showing “no significant change” compared to the previous eight months.

“This marks a continuation of evidence of price stabilization,” the firm said.

Meanwhile, real estate consultancy Phidar Advisory said that residential prices in Dubai dropped in the first quarter, with further declines projected during the year.

“Our research indicates rent declines are accelerating and will likely continue through the summer. This will inevitably pull sale prices down,” said Jesse Downs, managing director of Phidar Advisory.

Despite the slowdown, Damac is confident about investor appetite for Dubai real estate, El-Chaar said, pointing out that the developer recently launched its AED 7.4 billion Aykon City project, consisting of six towers on Sheikh Zayed Road and slated for completion in 2021. 

“We would not launch a product of that size if we believed that the market is not good. We have a strong belief in the market fundamentals,” he said.

“The demand is strong, and it is healthy demand. Today we have a very healthy market. The buyer is buying with full knowledge, they believe in the market, [and] they see that the returns on the product are higher than many places in the world.”

When asked whether the oil slump has had an impact on investor sentiment, El-Chaar noted that there are several buyers from oil-importing countries like India that invest extensively in Dubai, and such countries have benefitted from low oil prices. 

In terms of progress on its various projects, Damac is on track to hand over 800 villas and 450 apartments at its Akoya development in September, El-Chaar told Argaam. 

Most of the units at Akoya have been sold, he said, adding that fewer than 5 percent of the total units remain unsold.

Work has also begun on the Aykon City development, with piling rigs currently on site, he added.

The Dubai-listed developer is also eyeing a major share of the hospitality market, with 15,000 units currently in the pipeline.

“By 2021, we will be among the biggest hospitality players in town. We just introduced two four-star hotels inside Aykon City because we believe there's a big market for four-star hotels, and we also introduced four-star hotels in Akoya and Akoya Oxygen,” El-Chaar said, adding that the properties will be managed by Damac’s hospitality company, Damac Maison.

Write to Jerusha Sequeira at jerusha.s@argaamnews.com