Sep 11 2012
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INTERVIEW: Al Futtaim Grp Exec: Dubai Ppty Prices Back at 2007 Levels
Tuesday, Sep 11, 2012
--Prices have recovered to 2007 levels after long lull, Plumley says
--Plans to build 500 to 600 units in Dubai Festival City in next five years
--Arab Spring has given sales a boost
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--The Al Futtaim Group, one of Dubai's largest family conglomerates, is getting back to building and selling residential units in its massive Dubai Festival City development, as improved property market conditions push prices back up to 2007 levels, a senior executive said Monday.
"We're at about 1,300 [U.A.E dirhams] a square foot," Mr. Plumley said. "I think we're probably at late 2007 with villas and townhouses. ... I'm talking about when we had a sensible market on the rise."
The company recently put 24 new townhomes on the market and has since sold half of them. Next year, Al Futtaim is planning to sell some existing residential property that it had been leasing directly to tenants, Mr. Plumley said. All of it is part of a pickup in activity after the company decided to slow down in the wake of the financial crisis, which sent Dubai property prices into a freefall.
"Slowly, we want to take the master plan and develop it over the next 10 or 15 years," he said. "We're just now signing off on the next five years, which will bring us about 500 or 600 units more."
"Every developer would have loved to develop at the pace that 2007 and 2008 was creating," he added. "However, it was completely unsustainable. We all know that now. We perhaps didn't know it then, or if we did we didn't say it too loudly."
Dubai's apartment market is not doing as well as the villa market, Mr. Plumley said, largely because of an oversupply of apartments. Jones Lang LaSalle estimated in a report on the second quarter of 2012 that villa sale prices had risen 21% year-on-year in Dubai, while apartment sale prices were flat. About 3,000 units were added to the market in the second quarter, most of which were apartments, the consulting firm said.
These days, Mr. Plumley said families were increasingly looking to buy larger properties and settle permanently in Dubai, a contrast with the speculative fervor of the bubble. The Arab Spring has also had a positive effect, he said.
"The Arab Spring has had a huge impact on the region, and from a real estate perspective a huge impact on Dubai, and we are certainly benefiting from that," he said. "Just looking at our inquiries, most of our inquiries are from [people from the] GCC, the Levant area or Asia, not western Europeans, not Americans."
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