Private developers in Dubai have suggested that government-backed firms should focus more on rentals and master developments and leave buying and selling to them in order to demarcate clear lines and create a fair playing field to bring balance.
"The Real Estate Regulatory Authority is taking great steps but there is a need to do more. I am glad that the committee is formed to bring balance in the market. What more needed is to find right balance between government-backed and private developers - separating our duties properly. Because private developers cannot compete with government-backed firms because, for example, they have land for free, and banks have opened doors for them. There are a lot of good things with them. We cannot compete with them because we have to buy land," said Farhad Azizi, CEO of Azizi Developments.
PNC Menon, founder and chairman of Sobha, suggested that the government can consider leaving the sales sector to private developers and government-backed firms can hold the master development as well as leasing sector like hotels, offices and residential. He said things are happening fast after the formation of the committee and the results of its suggestions should come within two to three months.
Dubai established a real estate committee on September 2 to maintain stability and balance between supply and demand in the real estate market. The committee will also ensure that semi-government developers don't compete with private sector developers.
Earlier on Wednesday, Sheikh Ahmed bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority, President of Emirates airline and Chief Executive of the Emrates Group, opened Cityscape Global 2019 at the Dubai World Trade Centre. He was accompanied by Helal Saeed Almarri, director-general of Dubai Tourism; Sultan Butti bin Mejren, director-general of the Dubai Land Department; and other officials. The event will run until Friday.
As a result of competition amidst a slowdown in the market, Menon warned that some of the developers might go out of the market in the coming years. "There will be cleaning-up like any market in the next three to five years. Some of the companies may not be able to survive due to the requirement of the competition. Those who have got the capability will survive," he added.
Menon believes that growing population of Dubai will help absorb the new supply.
"For a population growth of 7 per cent, we need 40,000 units a year and if it is 5 per cent, there will be a need of 30,000 units. There will always be growth here because the UAE and Dubai have become a haven for the people of Indian Subcontinent, the Middle East and Africa. Hence, a population increase in Dubai will happen. As long as population grows 4-5 per cent, Sobha is safe," he added.
In order to jump-start the real estate sector, he suggested that the registration fee should be halved to 2 per cent because that can also make a lot of difference.
Azizi, meanwhile, seeks more support from banks because they are key players in developing the sector. "Banks are key players in mature markets like London, New York, etc. between developers and client. Here the banks have high interest rates and shy away which that is pretty disappointing," he added.
Azizi is planning to deliver 1,200 units in Dubai in the last quarter of 2019 with majority of deliveries taking place in Al Furjan and The Palm.
Firas Al Msaddi, CEO of fam Properties, suggested that in order to boost the real estate sector, the most important step to take internally within the Dubai real estate market is transparency.
"This is what will allow international players to jump in; international players especially institutional investors never come to a market that doesn't offer transparency of data and statistics because they can't make well-informed decisions," he added. "Improving the quality of data is essential too. The open-data source initiative by Dubai was an amazing initiative, a historical tipping point for the emirate as a city when we place it at a global scale."
Steven Morgan, of Middle East at Savills, suggested that developers need to differentiate their developments and offering from their competitors. "Making sure that what they launch is relevant to the current market dynamics and preferences. It includes among other things, focusing on excellent community amenities, well thought-out development management offering, superior post-handover aftercare, researched ergonomics and design preferences and accessible payment plans," Morgan said.
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