Real estate chiefs dismiss 'correction' reports

source Arabian Business

Dubai-based real estate chiefs have dismissed claims that the region's property markets are about to suffer a downturn in fortunes.

Recently, reports from companies such as US-based Morgan Stanley have predicted that prices will see a correction after years of massive increases.

But Ali Hussein Al Rahma, CEO of Eqarat.com, accused the reports of causing the current negative sentiment in the market.
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“I was the first to alert that someone has entered our market to instill fear. These are mostly, unfortunately US companies. Why are they doing this? To encourage investment in the United States. We have seen this with our own eyes,” he said.

Al Rahma heads one of the region’s largest property sales companies, with offices in the UAE, Oman, Kuwait and Jordan. The company is also expanding to Saudi Arabia, UK, Morocco and India and has sold properties in landmark projects such as Burj Dubai, Dubai Waterfront and Infinity Tower.

“I am on the ground and I can sense the market. There is fear on the higher level but once you go down to buying and selling there are enormous transactions happening on the ground,” said Al Rahma.

He said he is angered at suggestions indicating negative effects of the credit crunch on the Dubai market, saying the statements are far from reality.

A report published late September by EFG-Hermes had suggested that house prices in Dubai were set to decline by up to 20 per cent by 2011. It further said prices will hit their peaks in the first half of 2009 before declining in the second half of the same year.

The impact of the credit crisis on US and European markets is for the benefit of Dubai, noted Al Rahma. He added that investors who have entered Dubai years ago have grown with the growth of the markets and still continue to do so.

Al Rahma remained convinced there are plenty of investors in Dubai who will continue to put their cash into the market.

“They said they’ve found stability here in the UAE. They cannot buy anywhere else in Europe and the States,” he said.

There is a very slight slowdown in the market, admitted Al Rahma, but explained it was insignificant and for a “very limited period” of time, affecting only the financial institutions, not real estate directly.

“We expect to see stability in the market for the coming six to eight months. This is a healthy transition. The Dubai market is like a speed horse. It’s time for the horse to take a breathing period, for him to be able to run again at the same speed, if not at a higher speed,” said Al Rahma.

Al Rahma's comments come at the same time that Al Mazaya Holding expressed its satisfaction at the performance of real estate and investment activities in the Gulf area in general, and in the UAE in particular.

The company stated on Sunday that Dubai's property market will always be an investment destination, due to the numerous factors that enable the market so appealing, in spite of the existing international crisis.

Khalid Esbaitah, managing director and CEO, said: "There are three factors that form the major constituents that any successful investment relies on; firstly population growth, individual income second, and third, and most importantly, the solidity of the country's economy to achieve economical growth, liquidity flow and income diversity. UAE has all these three factors."

He added: "It is important to remember that annual real estate profits in the UAE range between 8 to 14%, as compared to 4% in other markets, meaning that this market will continue to attract investments for many years to come."