| 30 Mar 2008 |
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Dubai to get property price index soon
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Al Mal Capital finalising first such index to be released next month
Al Mal Capital, a diversified, multi-line investment bank, licensed and regulated by the Central Bank of UAE, will launch the first Dubai Property Price Index next month, a senior company official said.
"The Al Mal Dubai Property Price Index will show monthly where the real estate prices are heading. We are creating our own index, initially for Dubai real estate and later on it will include the Abu Dhabi property market as well," Robert Mckinnon, managing director (Equity Research), Al Mal Capital, told The Business Weekly.
"The data collected so far reveals that the index has seen a pretty big jump of around 10 per cent in the first two months of this year already," he said.
The Al Mal research division was set up in October last year and is headed by Mckinnon and nine other researchers. The division will, in the coming months, also look into various sectors of the economy and bring out research analyses on telecoms, banks, construction, energy and other sectors.
Median price
Mckinnon said, "As far as I know, there is no such property index in the entire Gulf Co-operation Council. We will be collecting data on a monthly basis and monitoring the prices of the property market and study whether they are increasing or decreasing." The Al Mal Property Price Index will be broken down between commercial and residential properties and will also provide a median price for each of these sectors.
"Initially, the index will be for Dubai and in the second half this year, we will have a similar index for Abu Dhabi also. We have just started an office in Saudi Arabia and at a later stage, data from the Kingdom will also be compiled," he added.
Mckinnon said that currently in Dubai, there is an acute shortage of commercial office property as compared to residential units.
"Here, you have just one per cent vacancy in office space, meaning that 99 per cent of space is already occupied," he said. Although there is a lot of office space coming up at the Business Bay and the Dubai International Financial Centre, because of the delays, the prices as well as the rentals for office space are very high. Mckinnon attributes the delay in supply to cost issues, shortage of labour and contractors overstretching themselves. "As a result of delays in all projects, supply shortage would continue and will keep the property prices high," he said.
According to Al Mal's recent research estimate, unit supply will be approximately 180,000 units for the three-year period between 2008 and 2010. However, the shortfall in deliveries in 2007 was because the industry was hit by several production constraints. Most notably, contractors were constrained by an extremely tight labour market compounded by a new Labour Law that required much of the existing labour force to return home to reapply for residence visas.
"As these issues have, for the most part, been resolved, we should see gradual improvement from contractors meeting delivery schedules," he said. In terms of household units, 202,000 households in Abu Dhabi and 154,000 in Dubai are expected to be released over the next five years.
© The Business Weekly 2008
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