Sunday, Oct 12, 2008

Gulf News

Dubai: A massive capital injection by global real estate fund managers could lift Dubai's real estate market, which many analysts feel is heading for a correction.

"As the prospects of the US and UK housing markets remain gloomy, global real estate fund managers are expected to inject cash into the UAE's property market, and we expect it to give the boost it needs in the coming months," Iseeb Rehman, managing director of Sherwoods, told Gulf News on Thursday, the last day of Cityscape Dubai.

"We have been approached by a number of officials running international real estate funds, for possible investment. This will boost the market in the coming months that we expect to slow down otherwise."

Sellers' market

Dubai's real estate market, which has seen more than Dh600 billion worth of new project announcements during the four-day event, is flooded with more sellers than buyers. This is expected to bring prices down further.

"The pace of sale has been slower in recent weeks. It is not clear if the market is going to go through a difficult situation," Rehman said.

"There is an increasing number of investors who want to exit the market."

He said the ratio between investors and end-users used to be 60:40 in favour of the investors or brokers.

"This has changed suddenly, which is good for the market as the real buyers will now enter the market to buy properties to live in."

Colliers International, the global real estate consultancy, said quarterly overall growth rate slowed from 42 per cent in the first quarter of 2008 to 16 per cent in the second quarter, representing an increase from 178 to 206 points on the underlying index.

Ian Albert, Colliers regional director, said: "If you consider the performance of other major cities over the same period, Dubai offered attractive returns in comparison. Looking forward, we expect a return to fundamentals as the demand-supply dynamic moves towards equilibrium."

According to Rehman, these factors make the UAE's real estate market still attractive compared to the US and European markets.

As Dubai's red-hot property market cools down, a lot of fly-by-night operators are expected to disappear, said a senior official of a brokerage firm.

Caution

"There are lots of developers, who do not have the right credentials, trying to attract buyers. Investors should do due diligence before putting their money in, so that they do not burn their fingers," M. Kaleem Khan, chief executive of NKR Properties, told Gulf News.

"The days of making a quick buck are gone. In the coming days the real picture will become clear."

He said villas from renowned developers are still a good buy.

"Projects developed by major developers such as EmaarEmaar, NakheelNakheel, Dubai Properties, AldarAldar, SorouhSorouh and HydraHydra will continue to appreciate.

"So end-users have nothing to lose or worry, even if the market corrects itself," Khan said.

"Don't look for short-term gains. Look for long-term real value," he said.

© Gulf News 2008. All rights reserved.

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