Dubai forms higher committee for real estate to balance market

Dubai formed a higher committee for real estate, headed by Deputy Ruler Sheikh Maktoum bin Mohammed and senior property developers, that aims to achieve a balance between supply and demand in the sector.

Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, said on Monday the body will aim to avoid a duplication of projects and ensure their added value to the economy.

Sheikh Mohammed said Sheikh Maktoum will ensure semi-governmental real estate companies do not compete with the private sector and that a strategic comprehensive plan will be developed for all property projects in Dubai for the coming decade.

The latest initiative comes after Sheikh Mohammed published an open letter at the weekend with six main points that addressed government work and ways to improve Emiratisation, services and the country's economy.

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"We are not one of the countries that move according to the average economic rates. We are a country that seeks to achieve time-saving economic leaps," Sheikh Mohammed wrote.

"In the next phase, we need [to pitch] quality projects, exceptional ideas to boost our economy. Real estate projects need to control their pace to bring added value to the national economy so as not to become a burden and a source of imbalance in our economic process."

The UAE property market slowed in the wake of a drop in oil prices that began in 2014, as well as ongoing concerns about an oversupply of properties. Experts, however, have forecast a recovery on the back of a new immigration regime offering a long-term visa for investors, the Dh50 billion Ghadan 21 initiative, Expo 2020 and changes to the freehold property law. Oil prices have also rebounded and are hovering between $50 to $60 per barrel.

In a report last month, Dubai real estate listings portal Property Finder said a record number of residential units expected to come online in the second half of the year will push Dubai property prices lower making apartments more affordable.

A total of 20,978 residential units were completed in the first half of 2019, according to Property Finder estimates. An additional 38,426 residential units within 152 projects that have at least an 85 per cent completion status as of July, are scheduled to be delivered by the end of the year.

An increase in supply of new homes pushed apartment rents in Dubai down 5 per cent year-on-year in the first half of the year, according to Property Finder. Rents are 21 per cent lower than they were two years ago, according to the portal.

Average apartment prices in the emirate declined 15.1 per cent in the second quarter of the year, compared with the second quarter of 2018 with villa and town house prices dropping 14.7 per cent during the same period, a report by property consultancy Cavendish Maxwell recently said.

Dubai is ranked as the third-most affordable city for prime real estate, with average prices of $600 per square foot, according to Savills' World Cities Prime Residential Index, which tracks 25 major cities worldwide.

"This extension to real estate governance is a very positive step bringing regulation which will cater the supply towards what is going to add value to the client and the economy, therefore limiting the potential of an influx of supply that there may only be limited demand for," said Lewis Allsopp, chief executive of Allsopp & Allsopp. "The interconnectivity of different real estate developments will bring more selection and choice to the market."