May 01 2013

Will series of Dubai mega-projects create market glut?

Wednesday, May 01, 2013

Dubai: The first phase of Mohammad Bin Rashid City is being promoted as a tourist destination but with a rush of similar entertainment, residential and retail projects announced recently, is there a danger of a glut in the market?

Some analysts suggest that despite the return of mega-projects to the market, there is a more calculated approach by developers to execute them.

“The development time line for these recently announced projects will likely be linked more closely to demand. Even with the most rapid construction and absorption these projects may see a 10 year delivery cycle,” said David Macadam, a real estate expert.

“The uptake on the supply and demand considerations will be managed more closely by the developers. Perhaps in the past when financial liquidity was abundant and speculation was rampant the supply and demand ratios were not in sync with market realities. Likely this time purchasers for these luxury homes will be the end occupier,” he said.

Developers of the MBR City-District One said they were not concerned about the supply of other offerings in the market, citing the prime location of the project.

“We are not worried...this is a freehold gated villa community in the heart of Dubai. It is a three to five minute drive to Dubai Mall,” said P.N.C. Menon, Chairman of the Sobha Group, which is in a joint venture with Meydan Group to develop the project.

Dubai has turned its sights to building more entertainment and retail destinations to attract tourists as a long-term strategy .

“With the increased number of people coming to live in Dubai, the increased numbers of tourists and the critical mass of population now living in Dubai these projects will be absorbed over time, making them viable,” Macadam said.

Dubai earlier announced five theme parks worth Dh10 billion to be developed by Meraas and phase two of the world’s tallest hotel the JW Marriott Marquis Dubai on Shaikh Zayed Road.

By Deena Kamel Yousef Staff Reporter

Gulf News 2013. All rights reserved.

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